Personnel Today
  • Home
    • All PT content
    • Advertise
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Equality, diversity and inclusion
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • XpertHR
    • Learn more
    • Products
    • Pricing
    • Free trial
    • Subscribe
    • XpertHR USA
  • Webinars
  • OHW+

Personnel Today

Register
Log in
Personnel Today
  • Home
    • All PT content
    • Advertise
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Equality, diversity and inclusion
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • XpertHR
    • Learn more
    • Products
    • Pricing
    • Free trial
    • Subscribe
    • XpertHR USA
  • Webinars
  • OHW+

Financial penaltiesEmployment tribunalsLegal opinion

What do financial penalties at tribunals mean for employers?

by Chris Fisher and Katherine Fox 7 Apr 2014
by Chris Fisher and Katherine Fox 7 Apr 2014

Employment tribunals can impose financial penalties on losing employers. Mayer Brown’s Chris Fisher and Katherine Fox look at what the fines mean in practice.

Financial penalties

When can an employment tribunal order an employer to pay a financial penalty in addition to compensation?

Since 6 April 2014, employment tribunals have a discretionary power to impose financial penalties on employers if they lose and their case has one or more “aggravating features”. Tribunals will be able to order a penalty of between £100 and £5,000. However, this power does not apply to any claim that was presented to the tribunal before 6 April 2014.

Aggravating features

What amounts to an “aggravating feature” has not been defined in the legislation that introduced the power. Instead, this will be a question for the tribunal to decide, taking into account any factors it considers relevant – including the circumstances of the case and the employer’s circumstances. The tribunal should only take into account information of which it has become aware during its consideration of the claim. However, the response to the consultation that took place prior to the legislation coming into force, suggests that negligence or malice on the part of the employer would have to be involved for a penalty to be imposed and employers would not be penalised for unintentional or accidental breaches.

The explanatory notes for the legislation set out a number of factors that may be taken into account when a tribunal is tasked with deciding whether or not to impose a penalty in a particular case. The notes suggest that one of the factors more likely to lead to a penalty will be where an employer is a large organisation with dedicated HR support. Other factors that may also make a tribunal more likely to award a penalty are the duration or repetition of the breach of the employment right or deliberate, malicious or negligent behaviour on the part of the employer.

The ability of the employer to pay the penalty should also be considered by the tribunal when deciding whether to order a penalty at all and when deciding the amount of any such penalty.

The explanatory notes suggest that tribunals will be less likely to award a penalty where the employer is a small or newly established business with limited HR support, for short or one-off breaches or for honest mistakes.

It is not yet clear how tribunals will use their discretion and whether more weight will be given to one particular factor. If a single factor alone is sufficient to justify a penalty – for example, where the employer is a large well-established organisation with dedicated HR support – then it seems likely that penalties could become a regular feature in tribunal hearings involving larger employers.

The penalty

A financial penalty can be ordered even if no compensation is awarded to the successful claimant – for example, in cases where a claimant wins their claim but suffers no loss or where a non-financial award is made such as reinstatement or re-engagement. However, where the tribunal has made a compensatory award any financial penalty ordered must be set at 50% of the award, subject to the £5,000 maximum and £100 minimum. In cases involving multiple claims in relation to the same facts, tribunals will only have the power to impose one penalty against the employer.

If an employer pays the penalty promptly and no later than 21 days after the tribunal decision, the penalty amount will be reduced by 50%. It is worth noting that the penalty is payable to the Secretary of State and into the Government’s consolidated fund rather than to the successful claimant.

Influencing settlement decisions

This is a discretionary system and the frequency with which penalties are imposed by tribunals and the basis for them doing so remains to be seen. It may be the case that the relatively limited amount of the maximum fine is unlikely to be enough on its own to persuade a large employer to settle a case. It is, however, another cost item to be borne in mind, coupled with the new tribunal fees, which they are also likely to have to pay if unsuccessful.

This article was originally published on 7 April 2014. It was updated on 18 September 2015 by Susan Dennehy, employment law editor.

Avatar
Chris Fisher and Katherine Fox

Chris Fisher is a partner and Katherine Fox is an associate in the employment group at international law firm Mayer Brown.

previous post
Tribunal watch: £22,000 award against council following flexible retirement confusion
next post
Employment tribunals: 15 unusual forms of harassment

You may also like

Whistleblowing lawyer awarded £423k by Foreign Office

4 Jul 2022

Christian doctor loses transgender pronoun case, but beliefs...

29 Jun 2022

Christian awarded £22k following dismissal over religious necklace

24 Jun 2022

Long Covid: what tribunal’s disability ruling means for...

23 Jun 2022

Bolt drivers strike as union launches workers’ rights...

15 Jun 2022

Whistleblowing nurse awarded £462k for unfair dismissal

15 Jun 2022

Frewer v Google: How it’s getting harder to...

30 May 2022

Aspers casino cashier excluded by colleagues wins £75k...

23 May 2022

BNP Paribas banker accused of ’emotional terrorism’ wins...

19 May 2022

Bald move: Tribunal was right in sex-related harassment...

17 May 2022
  • NSPCC revamps its learning strategy with child wellbeing at its heart PROMOTED | The NSPCC’s mission is to prevent abuse and neglect...Read more
  • Diversity versus inclusion: Why the difference matters PROMOTED | It’s possible for an environment to be diverse, but not inclusive...Read more
  • Five steps for organisations across the globe to become more skills-driven PROMOTED | The shift in the world of work has been felt across the globe...Read more
  • The future of workforce development PROMOTED | Northumbria University and partners share insight...Read more

Personnel Today Jobs
 

Search Jobs

PERSONNEL TODAY

About us
Contact us
Browse all HR topics
Email newsletters
Content feeds
Cookies policy
Privacy policy
Terms and conditions

JOBS

Personnel Today Jobs
Post a job
Why advertise with us?

EVENTS & PRODUCTS

The Personnel Today Awards
The RAD Awards
Employee Benefits
Forum for Expatriate Management
OHW+
Whatmedia

ADVERTISING & PR

Advertising opportunities
Features list 2022

  • Facebook
  • Twitter
  • Instagram
  • Linkedin


© 2011 - 2022 DVV Media International Ltd

Personnel Today
  • Home
    • All PT content
    • Advertise
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Equality, diversity and inclusion
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • XpertHR
    • Learn more
    • Products
    • Pricing
    • Free trial
    • Subscribe
    • XpertHR USA
  • Webinars
  • OHW+