Out-Law News 2 min. read
06 Nov 2013, 1:07 pm
Employment Minister Jo Swinson has proposed taking legal action after research commissioned by the Department for Business, Innovation and Skills (BIS) found that over half of those awarded compensation following an employment tribunal hearing did not receive their award in full.
"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," Swinson said. "Whilst this is primarily about justice for individuals, it is important that there is a level playing field for the majority of honest employers who follow the rules."
"We will look closely at how we can tighten things up to make sure that people get what they are owed. This includes potentially making changes to the employment tribunal rules to give judges the power to demand deposits from businesses who they think might not pay up. We are also considering fixed penalty notices for late payment, and naming and shaming employers who fail to pay out. And we need to make sure that people are aware how they can take enforcement action if they are not paid what they are due," she said.
Currently, individuals can apply to the court to enforce an unpaid tribunal award. They can either file a case with the county court, for an initial fee of £40; or they can access the services of a High Court Enforcement Officer through the Fast Track scheme for an initial fee of £60. Individuals on low incomes can apply for remission of these fees.
However the research, carried out by market research firm IFF Research on behalf of BIS, found that only 41% of claimants were aware of the options open to them if an award went unpaid. Among those that did not use enforcement mechanisms, only 28% were aware of their options.
IFF surveyed 1,000 individuals that had been granted an award by an employment tribunal between May and June 2013. The company found that only 49% of those individuals had been paid in full, while a further 16% had been paid in part. More than one third of successful claimants had therefore not received any of the money that they were entitled to, in some cases even after enforcement action was taken.
The most common reason given for non-payment, by 37% of respondents, was that the company no longer existed, had become insolvent or had otherwise ceased trading; while a further 17% were unable to locate the employer. However, 29% of those that had not been paid in full told the researchers that the employer had simply refused to pay.
Currently, if a company is insolvent, the Redundancy Payments Service can pay certain elements of an employment tribunal award. The Government intends to raise awareness of this service, as well as looking at what other actions it can take to make sure that people get their tribunal awards if the employer goes out of business.
Andrew Kane, an employment tribunal expert at Pinsent Masons, the law firm behind Out-Law.com, said that any changes would be aimed at smaller companies, who in some cases would be "wound up by the owners or allowed to go into liquidation in order to evade employment litigation".
