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This blog post was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Employment Tribunal Awards – Enforcement

Posted by: , Posted on: - Categories: Employment Tribunals, General
Jo Swinson
Jo Swinson

An employment tribunal can be a very costly process in terms of time, money and stress but what’s even worse is if you go through all of that and despite winning your case you still don’t get paid the money that you are due.

Employers should not be allowed to dodge their responsibilities or tribunal judgements. Not only does it hurt claimants, allowing this behaviour to go unpunished risks undermining the work and reputation of the majority of businesses that are compliant and do pay what they owe.

The Small Business, Enterprise and Employment Bill will introduce a new penalty for employers that fail to pay employment tribunal (ET) awards and Acas settlements. I am pleased to announce that employers that have to pay a penalty will also face the prospect of being publicly named.

We know from research conducted for BIS, and from talking to Citizens Advice, academics and the High Court Enforcement Officers Association (HCEOA), that there are a variety of reasons for the low rate of payment of awards and that no single solution will fix the problem.

Introducing the financial penalty and naming scheme are just two of the ways that we are working to encourage prompt and full payment and make sure people that people who have gone through the stress and cost of a tribunal get what they are owed.

This post explains more about what we are doing and asks for your help in understanding some of the problems of enforcement.

Improving access to and effectiveness of current enforcement options

A dedicated ‘fast track’ service exists in England and Wales to help people enforce their awards but one of the main reasons given for not enforcing unpaid awards is a lack of awareness of the options available. Only 41% of claimants surveyed agreed they knew the options available to them.

We are working across Government to increase awareness of the available options through improved guidance and ensuring that, from the outset, both claimants and employers know the consequences of non-payment and available enforcement options. It is also important to ensure that parties know what information they need to improve their chances of recovering what they are owed.

Can pay, won’t pay

Not all employers that fail to pay on time are rogues and the penalty scheme will firstly provide a reminder that payment is due and that there are real financial consequences to non-payment.

However, there are times where a company will just refuse to pay. They may not accept the tribunal’s judgment (and may not have even defended the claim) or believe that there are few consequences of not paying what is owed. Alternatively, they may rely on their former employee giving up, or seek to frustrate enforcement action with appeals and non-compliance.

Where enforcement action is taken by an individual, there are consequences for the employer, whether or not the action is ultimately successful in obtaining payment of the award. A record of the action is made on the publicly searchable Register of Judgments, Orders and Decisions. This register is used by credit companies when assessing credit scores and inclusion may impact on the ability of the employer to secure further credit.

With the new penalty they will also face the risk of being publicly named. This is an additional incentive for the employer to pay what they owe, particularly where a discredited reputation may have more impact than a financial penalty.

‘Phoenix’ firms

 Where the employer enters a formal insolvency (such as liquidation or administration), it is possible to reclaim some awards and payment, subject to some statutory limits, from Government through the Redundancy Payment Service.

More than half of those identifying insolvency as a reason for non-payment believed that the company was now trading again. Where companies move assets to a new company and start up under a different or similar name to deliberately avoid paying awards this behaviour could be grounds for director disqualification.

This is not a new problem and whilst there is advice available on how to enforce an award, many people seem to be unaware of it or what steps to take to report fraudulent suspected misconduct. Having worked their way through employment law it is not surprising that people may be reluctant to try and work their way through company law!

As with enforcement in ETs there are options available in these situations but little awareness of how to access them and use them effectively. The Bill has a number of measures that will help improve this:

  •  Strengthening the company director disqualification regime and increasing the likelihood of victims of rogue directors recovering some of their losses from the culpable directors. The court can already take into account misconduct in previous failures but these new measures will require them to do so in appropriate cases, especially where the director’s behaviour in previous failures points towards a pattern of misconduct.
  • Introducing a new power to make a compensation order against a disqualified director, where the conduct for which that person has been disqualified has caused loss to one or more creditors.

How you can help

 We are conducting further research on payment rates for claimants receiving awards following the introduction of fees (due to publish in the summer). This will help establish the scale of the problem and provide a base from which to assess the effectiveness of our work. But numbers can only tell us so much and we are running a short survey to take into account experiences and ideas from those that have gone through the process, represented or advised someone that has or has even been discouraged by the prospect of enforcement action. There is still time to share your story and I encourage you to tell us your experiences and thoughts.

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