Penalties for Employers Who Do Not Pay Employment Tribunal Awards

An independent review into modern ways of working, and the effectiveness of the tribunal system in enforcing rights, was carried out by Matthew Taylor and resulted in the Good Work Review which was published in July 2017. Following consultations on this matter, the government’s ‘Good Work Plan’ released in December 2018 confirmed that legislation would be introduced to impose sanctions on organisations who commit repeated breaches. The maximum penalty for an aggravated breach increased, from £5,000 to £20,000, with effect from 6 April 2019.

Department for Business, Energy and Industrial Strategy (BEIS) Penalty Scheme

Individuals can register their unpaid award free of charge with the BEIS penalty scheme, 42 days after the date of an employment tribunal judgment.

Once an enforcement officer has verified the claim, a warning notice is sent to the employer, warning them that if they do not pay the award they will face a penalty and public naming. If the award remains outstanding after 28 days, the employer is sent a penalty notice, ordering them to pay a penalty to the value of 50% of the original award amount and 8% interest per year.

Naming and Shaming

Organisations who fail to pay employment tribunal compensation awards within 42 days of the judgment could also be publicly named by BEIS.

BEIS will write to the organisation, providing a further period of 28 days to pay the award. A failure to pay within this time period will result in a penalty notice and a naming notification letter, whereby the organisation is provided with 14 days to notify BEIS of the valid reason why they can’t be named.

Naming lists will be publicly released by BEIS on a periodic basis. The scheme applies to any tribunal compensation awarded on, or after, 18 December 2018.

At the penalty notice stage employers will also be sent a naming notification letter warning that they will be named unless they submit valid representations within 14 days and the representations are accepted.

This letter is only sent if the claimant has agreed for their employer to be named.

Naming lists will be publicly released on a quarterly basis.  The naming round will take the form of a press release on GOV.UK.

Employer names will appear on the list alongside the outstanding award after a minimum of 42 days following a warning notice.

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