Financial penalties on losing respondents at tribunal

The introduction of the new Enterprise and Regulatory Reform Act 2013, which is due to come into force on 6th April, adds a new section into the Employment Tribunals Act 1996.

This gives Tribunals the authority to impose financial penalties on employers who are found to have breached an employees’ employment rights and where the Tribunal considers that the breach had one, or more, ‘aggravating features’.

There is no definition of what constitutes an ‘aggravating feature’ but explanatory notes provided with the Enterprise and Regulatory Reform Act 2013 suggest that where actions are deliberate, negligent or malicious, where the employer is a larger organisation with a dedicated HR team or where the same right had been repeatedly breached were all likely to be treated as ‘aggravating features’. Pursuing an unreasonable defence or otherwise conducting proceedings in an unreasonable manner may also result in a fine. The Tribunal has discretion to take into account the duration of the breach and also the behaviour of both parties.

A penalty will not automatically be imposed just because an employer loses a claim, as was originally suggested prior to consultation, but if a penalty is imposed it will be 50% of the award with a minimum penalty of £100 and a maximum of £5000 per claim, even if there are several claimants. The Tribunal can also decide to impose a fine in cases where the claimant wins but does not get any financial award.

The penalty is payable to the Secretary of State in addition to any compensation awarded to the claimant. If you settle the fine within 21 days you will only have to pay half of it.

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