Financial Penalties for Employers
Since 6 April 2014, Employment Judges have had the power to issue a fine (in addition to any compensation awarded to the employee) where an employer has breached workers rights and there were ‘aggravating features’.
If the Tribunal makes an award of compensation, the amount of the penalty is 50% of the award. The penalty is subject to a minimum threshold of £100 and an upper ceiling of £5,000. However, employers will qualify for a reduction of 50% if they pay the penalty within 21 days after the day on which notice of the decision to impose the penalty is sent to the employer.
The scheme was introduced with great fanfare with many commentators nervous that the risk of heavy financial penalties might dissuade employers from defending claims, and being pressured into settling unmeritorious ones.
It would appear, however, that since the introduction of the scheme, just 18 financial penalties have been imposed, of which only 12 have actually been paid.
These statistics, revealed in the answer to a parliamentary question posed by the Green Party's Caroline Lucas, might make you wonder what all the fuss was about.........
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Q: How many financial penalties have been imposed to date on respondent employers for aggravated breach of employment law under s.16 ERA 2013; how many such penalties (a) have been paid and (b) remain unpaid; and what the total value is of penalties (i) imposed, (ii) paid and (iii) not yet paid.
A: 18 Financial penalties have been imposed to date on respondent employers for aggravated breaches of employment law... Of these, 12 penalties have been paid, 6 remain unpaid either because the company has been dissolved or efforts by the debt collection agency for recovery of the amounts have been exhausted.The total value of penalties imposed is just over £54,400, Total paid is just over £17,700, which was fully paid within 21 days so the 50% discount applied. The value of the 6 unpaid penalties is £19,000.”
