Employers to face penalty if they lose tribunal cases

Employers that lose employment tribunals could face a penalty of half of the award given to the claimant, as part of government plans for workplace dispute reforms.

Last week, the Government published its consultation on reforming workplace-dispute resolution, which included proposals aimed at reducing the number of tribunal claims and speeding up the tribunal process.

It has since been noted that the consultation document also contains plans to give employment tribunals the power to impose penalties on employers that lose their cases. These employers would have to pay a penalty of half of the total award, within a minimum threshold of £100 and a maximum of £5000. The fine would be reduced by half if the employer paid within 21 days.

Manufacturers’ organisation the EEF has argued that the penalty would contradict the Government’s aim of boosting private sector confidence and helping to create jobs.

Steve Radley, EEF director of policy, said: “On the day the Government announced an employers’ charter to reassure business about the balance of employment legislation, it undermined this principle by burying a potential new tax at the back of a lengthy consultation.

“A package designed to reduce the burdens on business now contains a ‘double jeopardy’ proposal which would impose extra costs at a time when companies are already under immense pressure.”

According to the consultation document, the aim of the penalty is to “allow the tribunal to send a clear message to an employer, and employers more generally, that they must comply with their employment law obligations”.

However, Laurie Anstis, employment and business immigration lawyer with Boyes Turner, argues that the plans may sway an employer’s decision on whether or not to make an offer to settle.

In his blog Work/Life/Law he wrote: “If the case is settled outside the tribunal there will be no penalty payable, and this is typically going to make the employer more likely to make an offer (and to make a higher offer) than they otherwise would – even if the claim appears weak.

“This seems to be contrary to the thrust of the rest of the reforms, which are designed to discourage employees from taking a chance on a weak claim in the hope of a quick payout.”

Keep up to date with tribunal issues with XpertHR’s Tribunal Watch blog.

XpertHR also provides regular summaries of recent employment tribunal rulings.

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