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Tackling rogue employers who refuse to pay tribunal awards

Posted: 18th March 2015   In: Business Employment

A government minister says it’s scandalous that so many rogue employers are getting away with not paying tribunal awards on time.

Business Minister Baroness Neville-Rolfe warned firms that they could soon face penalties if they continue to delay compensation payments to employees. New enforcement measures are being introduced as part of the Small Business, Enterprise and Employment Bill which is currently going through Parliament.

Under the new measures, employers who haven’t paid an award will receive a warning notice.

If they still refuse to pay, they will face a penalty of 50% of the award. Repeated non-payment will lead to further penalties.

Baroness Neville-Rolfe said: “Without enforcement, only 40% of awards are paid within six months. That is clearly scandalous. Our financial penalty clause is intended to incentivise prompt payment of employment tribunal awards and to prevent employers ignoring judgments by employment tribunals.”

The new enforcement measures follow research commissioned by the government that showed that more than half of tribunal awards to employees are not paid in full. The most common reason for non-payment is that employers simply refuse to comply.

Employment Relations Minister Jo Swinson said: “We are determined to clamp down on businesses who fail to pay out. Far too many cases are not being resolved leaving people out of pocket. Taking an employer to tribunal is a stressful enough process without having to face the possibility of not getting what you are entitled to if you win your case.

“Whilst this is primarily about justice for individuals, it is also important that there is a level playing field for the majority of honest employers who follow the rules. Rogue employers should not be allowed to simply get away with not paying.”

Baroness Neville-Rolfe also addressed the issue of fees for employees bringing a claim to a tribunal. Recent research showed that claims have fallen by 80% since fees were introduced in July 2013. She said she shared “to some extent” the concerns that employees were being denied access to justice.

The government intends to review the situation but Baroness Neville-Rolfe said she still felt it was reasonable that the cost of administering the tribunal service should be met, at least in part, by the people using it.

We shall keep clients informed of developments.

Please contact Jackie Cuneen if you would like advice about employment law issues.

Posted by: Jackie Cuneen
Luton Office