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Coming up this Autumn - financial penalties for employers

11th July 2013

With effect from 27 October 2013 an employer who fails to meet their employee obligations may be liable to pay a financial penalty directly to the Government in addition to any compensation awarded by the employment tribunal to the employee.

Interestingly, the worker who has been subject to the breach will not be the beneficiary as the financial penalty is to be paid directly to the Government. And similar to a parking fine, the penalty will be halved if the employer pays it within 21 days of receiving the tribunal’s decision.

The rationale for this latest employment legislative change is to encourage employers to take appropriate steps to and to deter repeated breaches of employment law.

Tribunals will have the discretion to order the employer to pay a penalty of at least 50% of the amount of the Claimant’s financial award subject to a minimum of £100 and a maximum of £5,000 if the tribunal concludes an employer has breached any worker’s right and that the breach had an aggravating factor. Unhelpfully, the legislation does not specify what amounts to an aggravating feature although the explanatory note accompanying the Bill indicated it was likely to be found in cases where the employer’s action was deliberate or committed with malice or where the employer had repeatedly breached the employment rights concerned. We can therefore expect some uncertainty until we see exactly how this this new provision is being exercised by the employment tribunals.

Apportioning liability between employers

The Employment Appeal Tribunal (EAT) has confirmed in Country Weddings v Crossman that it has no power to apportion liability between the Respondents in a compensation award.

In this case, the Employment Tribunal had decided that the compensation it awarded for breach of the information and consultations obligations in a TUPE transfer should be borne entirely by the transferee.

The EAT overturned this decision and held that the TUPE Regulations provided for liability to be joint and several between transferor and transferee and that if there was any issue as to the relative share of the liability that this was a matter to be determined in the County Court or the High Court under the provisions of the Civil Liability (Contribution) Act 1978.

The contents of this update are intended as guidance for readers. It can be no substitute for specific advice. Consequently we cannot accept responsibility for this information, errors or matters affected by subsequent changes in the law, or the content of any website referred to in this update. © Mundays LLP 2013.

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