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Financial Penalties on Employers

Employment Law

With effect from 6 April 2014, The Enterprise and Regulatory Reform Act 2013 is introducing a power for employment tribunals to be able to order Employers to pay a financial penalty to the Secretary of State where the tribunal concludes that an employer has breached a worker’s rights in relation to a claim the worker has brought, and the tribunal is of the opinion that the breach has one or more aggravating features.

Aggravating features are likely to be where there has been persistent breaches of a right by an employer, where a breach is long in duration, where a breach was committed with malice or where the Employer has significant HR resources at its disposal.

The tribunal has discretion as to whether to order such a penalty to be paid, and can do so independently of whether or not it makes a financial award against the employer in relation to the claim presented.

In deciding whether to issue a penalty, the tribunal must have regard to the employer’s ability to pay.

Where no financial award is made to the employee

Where no financial award is made to the worker, the tribunal has discretion as to the amount of the penalty and must have regard to the employer’s ability to pay when deciding the amount. Any penalty must be at least £100 but no more than £5,000.

Where a financial award is made to the employee

Where the tribunal makes a financial award to a worker in relation to a claim and orders the employer to pay a penalty, the amount of the penalty will be 50% of the financial award. However, the penalty must be at least £100 and cannot exceed £5,000.

If the employer pays the penalty within 21 days of notice of the penalty being sent to the employer, the penalty is reduced by 50%.

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Jacqueline Penfold
Jacqueline Penfold
Tina Ripley
Tina Ripley