Employers Losing Tribunal Claims Face Financial Penalties

Employers losing employment tribunal claims may face a financial penalty in addition to having to pay compensation.

From 6 April 2014, employment tribunals will be able to require employers who lose claims to pay a financial penalty to the Secretary of State where any breach of employment rights has “one or more aggravating factors”.  

The amount of the penalty will be is 50% of the compensation awarded, subject to a minimum of £100 and a maximum of £5,000.  The amount reduces by half if payment is made within 21 days.  Tribunals will have to take account of the employer's ability to pay when deciding on the level of the penalty.

It is unclear what will amount to "aggravating features" although the Government has suggested that tribunals will impose penalties where "the breach involves unreasonable behaviour, for example where there has been negligence or malice involved" and not where there has been a genuine mistake. It has also suggested that a tribunal will be able to take account of any factors 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".

Tribunals will only be able to order financial penalties in cases started on or after 6 April 2014.