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Penalty Notices for unpaid settlements and employment tribunal Awards.

Currently, employment tribunals can order employers to pay an additional 50% of any damages awarded to its employee where “aggravating features” exist. This financial penalty is payable to the employee.

Legislation does not define what an aggravating factor is but an example of an aggravating factor would be an employer, deliberately and repeatedly breaching an employment right. This could be an employer’s failure to allow an employee to be accompanied at a disciplinary hearing by a trade union official or a work colleague.

From April 2016, it appears that the government has decided to “crank things up a notch” by introducing a new penalty for unpaid awards and settlements. Unlike the penalty described above, this penalty will be payable to the Secretary of State and not the employee.

This new piece of legislation will be contained in Ss37A – 37Q of the Employment Tribunals Act 1996. It will provide that, for any award or settlement that remains unpaid, the employer will receive a warning notice.  If the monies still remain unpaid, a penalty notice of 50% of the outstanding sum will be issued. This I am sure is not music to any employers’ ears but it may help knowing  that the tribunal will only be able to issue a penalty notice subject to a £100 minimum and a £5,000 maximum. Given the significant number of unpaid awards, this decision is definitely a step in the right direction and deserves a “thumbs up” from us. 

Posted in: Employment

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