April 22, 2014

Penalty! (For Employers in Tribunals)

Judges can now issue financial penalties against employers who lose at Employment Tribunal and are found to have committed foul play – thanks to new powers awarded by the government.

There has been much hullaballoo of late about the introduction of fees for Claimants to issue a Tribunal claim in the first place and then proceed to a hearing in the second.

There has been an abundance of debate about whether the effect is to deter the opportunistic chancers or to erect a barrier to the genuinely wronged. The reality is probably a mixture of the two.

What can’t be disputed is that where Claimants do pay the fees they are swelling the government coffers. But it’s not all one way traffic.

Under the new fees regime employers already have to stump up a hefty fee if they want to appeal against a Tribunal  judgment by going to the EAT (Employment Appeal Tribunal).

They can now, courtesy of the new s12A of the Employment Rights Act 1996, be forced to pay a fine of up to five thousand pounds if they defend and lose an Employment Tribunal claim where they have been found to have breached the Claimant’s employment rights and where the breach has “one or more aggravating features”.

Aggravating features are not defined in the legislation and it will be up to the Employment Judge to decide if there have been any.

But government guidance suggests penalties will apply where the employer’s action was deliberate or committed with malice, the employer had an HR department (and therefore should have known better) or the right concerned was repeatedly breached.

The extent to which Employment Judges see fit to apply the penalties at all and the threshold of aggravating features at which they kick in remain to be seen.

But getting taken to an Employment Tribunal will become a potentially even more expensive business with compensation to the Claimant, paying the Claimant’s costs and now paying a penalty to the government all possible outcomes of a bad result.

This makes it more important than ever to get it right in terms of policies, procedures and dealing with employees.

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