The Enterprise and Regulatory Reform Act 2013 (ERRA), which received Royal Assent on 25 April 2013, included a provision giving Employment Tribunals discretionary powers to levy financial penalties against employers who lose claims.
The Enterprise and Regulatory Reform Act 2013 (ERRA), which received Royal Assent on 25 April 2013, included a provision giving Employment Tribunals discretionary powers to levy financial penalties against employers who lose claims. As of April 6, this provision is now in force.
Prior to this provision coming into force, a Respondent employer could be ordered to reimburse a Claimant employee for the issue and hearing fees they might have had to pay to bring their claims. In addition Claimants could achieve an uplift on their damages of up to 25% if their employer did not follow the ACAS Code on Disciplinary and Grievance Procedures where it applies.
Now in all claims issued from yesterday (6/04/2014) the Employment Tribunal will have the power to impose a financial penalty on any Respondent employer unsuccessful in defending all the claims against them , if aggravating factors are found to have been present.
Aggravating factors for such penalties are likely to include the size of the employer (bigger employers with in house HR /legal recourses available to them being at greater risk); longstanding or repeated breaches of employment law; and acts which are deliberate or malicious. However, the behaviour of both parties will be taken into consideration.
Payable to the government, these penalties will range from £100 to 50% of any sum awarded to the successful Claimant (capped at £5,000) although the employer’s ability to pay must be taken into account and there is a 50% reduction available if the penalty is paid within 21 days of the date the written penalty notice is sent out.
Clearly the likelihood of such a penalty will be a consideration for employers when deciding whether to fight a claim or to offer a commercial settlement. Beyond that the obvious lesson for employers for now if that you ignore the ACAS Code at your peril.
For further information on the content of this article or other changes introduced by the Enterprise and Regulatory Reform Act please contact Employment solicitor David Hacker.