21 February 2014: From the 6th April 2014 Employment Tribunals will have the power to order an employer who has lost at tribunal to pay a financial penalty of up to £5,000 to the Secretary of State, where the case has ‘aggravating features’.
Aggravating features? There is a lack of clarity on what will amount to ‘aggravating features, which are not explained or defined in the legislation. According to the government, tribunals may impose penalties where “the breach involves unreasonable behaviour, for example where there has been negligence or malice involved”. It appears that genuine mistakes by employers will not be penalised.
If a financial award has been awarded, the financial penalty must be 50% of the amount of the award. However the employer does not have to pay the full penalty if it pays 50% of the penalty within 21 days (rather like a parking fine).
It appears it will be up to the Tribunal to decide whether the conditions for imposing a penalty are met, taking into account any factors that it considers relevant, including the circumstances of the case and the employer’s circumstances, which could include ‘the size of the employer; the duration of the breach of the employment right; or the behaviour of the employer and of the employee’.
Though they are unlikely to be awarded very often, the imposition of penalties may make employers in (for example) harassment cases a little more reluctant to proceed to a full merits hearing. In the meantime, all the fines will go into the government coffers, so that’s one way to reduce the national deficit.
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