In May 2009, research published by the Ministry of Justice (MoJ) showed 39% of people awarded compensation by an employment tribunal had never been paid and only half (53%) of awards had been paid in full.
Historically, a successful claimant seeking to enforce an unpaid employment tribunal compensation award would have to register the judgment in the County Court before any action. This was necessary as the employment tribunal did not have the power to enforce its own judgments.
In April 2009, a database operated by Registry Trust (a not-for-profit company) on behalf of the MoJ began to register details of individuals and companies who had failed to pay tribunal awards made against them. This database is freely accessible by the public and credit reference agencies and currently holds details of more than 570 individuals and companies who have failed to pay in the past year.
The then justice secretary, Jack Straw, confirmed tough new measures would be put in place to force employers to pay awards of damages made against them. Consequently, the employment tribunal fast-track scheme came into force on 6 April 2010.
The effect of the scheme is to simplify the whole tribunal enforcement process by giving individuals awarded compensation by the employment tribunal direct access to the services of High Court enforcement officers.
From 6 April 2010, providing the compensation award is £600 or more, a claimant only needs to pay a £50 court fee to issue a writ to seize assets to the value of the judgment awarded to them. This figure will then be added to the debt owed by the employer. If the award is slightly less than £600, it may still qualify once fees, costs and interest payments have been added.
A court-appointed bailiff is engaged by the County Court and receives payment, irrespective of making a successful recovery. But a High Court enforcement officer is engaged by the judgment holder and only receives payment upon a successful recovery. As a result, High Court enforcement officers tend to have a higher success rate.
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The MoJ has claimed the new powers were necessary due to a large number of employers failing to pay up after losing a tribunal hearing. The then justice minister, Bridgett Prentice, said: “The government is determined to ensure people are not denied access to justice by a small minority of unscrupulous individuals or companies who refuse to respect the award. The fast-track will ensure all recipients can pursue their awards with ease.”
It is likely the new scheme will have a considerable impact on the success of individuals seeking to enforce awards of damages made to them by employment tribunals. This is for two reasons, the first being the increased risk to employers from High Court enforcement officers pursuing the judgment debt in a much more determined way and the embarrassment this may cause. Second, many employers will want to avoid having their details added to a public register that shows they have unsatisfied judgments against them, affecting their reputation and the willingness of third parties to deal with them.
It is proposed that an assessment of the scheme should be carried out after two years. The MoJ has also indicated that it expects to add Acas settlements to the fast-track scheme at a later date.
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Key points
- The fast-track scheme came into effect on 6 April 2010.
- The aim of the scheme is to decrease the number of employment tribunal compensation awards that go unpaid.
- It allows enforcement officers to access employers’ premises and seize goods to the value of the judgment debt.
- The scheme applies only in England and Wales, to awards of £600 or more and debts up to six years old.
Russell Brown, employment partner, Glaisyers Solicitors
