The Resolving workplace disputes consultation, unveiled by the Department for Business, Innovation and Skills last Thursday, is designed to cut the number of claims being pursued through employment tribunals and remove barriers to recruitment.
However, the consultation paper includes a section that proposes that employment tribunals impose financial penalties on those employers found to have breached an individual’s rights. This would be payable to the Exchequer, rather than claimant, providing some element of recompense for the costs incurred to the system through the employer’s failure to comply with their obligations, and avoiding an incentive for employees to bring speculative claims.
The financial penalty would be based on the total amount of the award made by the employment tribunal. It would be half the amount of the total award so that the level of financial penalty is proportionate to the award. There should be a minimum threshold of £100 and an upper ceiling of £5,000.
"While we recognise that business will be opposed to such a proposal, we take the view that it will encourage employers to have greater regard to what is required of them in law and, ultimately, will lead to fewer workplace disputes and employment tribunal claims. Good employers will have nothing to fear, while their competitors, who gain advantage by treating their employees unfairly, will properly be held to account," the paper says.
"Introducing such powers would allow the tribunal to send a clear message to an employer, and employers more generally, that they must ensure that they comply with their employment law obligations," the paper adds.
But Ben Willmott, senior public policy adviser at the CIPD, said that the existing regime was a big enough deterrent for employers and that the median awards were already significant.
"It is not just about how much you pay but also how much time is needed to prepare for a tribunal. The associated costs are much higher. Adding additional costs on top is extreme. I don’t think it will act as a deterrent and employers are already punished significantly," he said.
"We believe employers should invest in management capability as this is the best way of preventing breaches in individual rights."
Business groups have broadly welcomed the paper, which is being introduced following lobbying by employers in response to a 56% ruse in tribunal claims in 2010 (nearly 236,000 in total). Employers have until 20 April to respond to the consultation.
