Quadrupling of the maximum penalty against employers for an aggravated breach

From 6 April 2019 the maximum penalty an Employment Tribunal is able to order against a losing employer will quadruple from £5,000 to £20,000 in cases where it is found that an employer has breached any of the workers’ rights to which a claim relates, and that breach has “one or more aggravating features”.

Background

If an Employment Tribunal concludes that an employer has breached any worker rights to which a claim relates, and it is of the opinion that the employer’s breach has one or more aggravating features, it may order the employer to pay a penalty to the Secretary of State. If the penalty is paid within 21 days, the amount of the penalty is reduced by 50%.

The financial penalty scheme has not been particularly effective since it was introduced in 2014, with only £17,000 being collected in financial penalties since then.

From 6 April 2019 the maximum penalty for an aggravated breach of employment law will be quadrupled from £5,000 to £20,000 in new measures which are designed to improve enforcement.

When determining if an employer’s breach of employment rights has “one or more aggravating features” a Tribunal will take into account a number of factors such as whether:

  • the action was deliberate or committed with malice;
  • the employer repeatedly breached the employment right concerned; and
  • the employer has a dedicated HR team.

Comment

Time will tell whether Employment Tribunals will now more readily impose penalties where they deem aggravated breaches to have occurred. Employers should however bear in mind the ability of Tribunals to make such awards, particularly when conducting risk and costs assessments of Tribunal claims and deciding upon settlement strategy.

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