From 6, April 2014 employers may face financial penalties when losing in an employment tribunal. The Employment Tribunals Act 1996 has been amended to allow an employment tribunal to make an order where the employer pays a financial penalty to the Secretary of State – when they conclude that the employer has breached the workers rights involved in the claim – and that the breach has one or more aggravating features.
The legislation does not define what aggravating features actually are however, the government have offered some explanatory notes which suggest instances that may be considered to be aggravating features. The employment tribunal must take into account any factors that it feels relevant, which include the circumstances of the case at hand and the situation of the employer defending the claim.
The tribunal may consider the size of the employer, the length of the breach that the employee is complaining of and the behaviour of the employee and employer involved in the claim. They may also consider that the employer’s behaviour had aggravating features where the action was deliberate or was committed maliciously; the employer had repeatedly breached the employment right that the employee is complaining of; or that the employer was an organisation with a dedicated HR team.
The tribunal may also consider the length of time the organisation has been operating, whether the mistake was genuine or the company only has a limited HR function.
When imposing fines the employment tribunal must consider the company’s ability to pay any fines imposed. Where the tribunal makes a purely non financial award such as reinstatement, then the financial penalty must not be less than £100 but cannot exceed £5,000. Where a compensatory award is made in the favour of the claimant then the financial penalty must be 50% of the financial award subject to the £100 minimum and £5,000 maximum. This penalty is reduced by 50% if the employer makes a payment within 21 days of the penalty being issued.
What does this mean for employers?
Employers must ensure that they deal with all complaints quickly and fairly and ensure that employment rights are not breached maliciously – in order to avoid facing any penalties in the employment tribunal.
The guidance is silent on the use of outsourced HR services; however, it is likely that the tribunal would regard such a service as a dedicated HR team, thus any issues must be reported and advice sought as quickly as possible.
For further information on employment tribunals or any other employment issues please contact our Employment and HR team on 0161 475 7666.