Non-payment of employment tribunal awards
Note: a subsequent legal change has affected the accuracy of this material.
A very large percentage of respondents in tribunal cases don’t pay their employment tribunal awards. This rarely, if ever, happens to Hatton James Legal as we vet our opponents so that our clients don’t waste their money.
Where an employer fails to pay the required sum on time, an enforcement officer can issue a “warning notice” to the effect that a financial penalty will follow unless a specified amount is paid by a set date, at least 28 days from the warning notice date.
Where the employer fails to comply with a warning notice, the enforcement officer may issue a “penalty notice” imposing a financial penalty, which will be 50% of the unpaid amount but no more than £5,000. If the employer pays the outstanding amount and the financial penalty within 14 days of the issue of the penalty notice, the penalty payable is reduced by 50%. The money from the financial penalty does not go to the successful claimant but the government.
Since April 2016, tribunal enforcement officers have been able to impose financial penalties on employers who fail to pay employment tribunal awards made against them. Given that it costs up to £1,200 in employment tribunal fees alone to bring a claim, it is ever more important to ensure that applicants receive the awards to which htey are entitled. The Commercial Secretary to the Treasury, Baroness Neville-Rolfe, has confirmed that since the introduction of the penalty regime, 60 penalty notices have been issued, confirming that htis number comes as a result of 164 warning notices for defaulting employers. This has led to an amount of £83, 000 being recovered.
Financial penalties are a bid to enforce payment and serve as a warning to other employers to comply with the employment tribunal order to pay compensation to the employee. However, the figures indicate that some employers are taking a laid-back approach to paying employment tribunal awards on time. For this reason, employment tribunal judges are exercising this power without hesitancy and it seems likely that this approach will continue in the future as the government continues to encourage compliance.
By Gina Mukova