Employers who breach their workers’ employment rights could face fines in addition to compensation under Government proposals.
A financial penalty of a minimum of £100 and a maximum of £5,000 could be slapped on employers by employment tribunals where the employer’s behaviour is considered to be an ‘aggravating feature’.
There will be a 50% reduction for employers if the financial penalty is paid within 21 days. The penalty is paid to the Government, not the employee.
The proposals, under the Enterprise and Regulatory Reform Bill, provides certain factors which may be taken into account including the size of the employer, the duration of the breach of the employment right or the behaviour of the employer and of the employee. The example of factors is non-exhaustive and it is for the employment tribunal to decide.
Guidance notes on the Bill explain that an employment tribunal may be more likely to find the employer’s behaviour had aggravating features where:-
- the action was deliberate
- the action was committed with malice
- the employer has a dedicated human resources team
- the employer repeatedly breached the employment right concerned.
An employment tribunal may be less likely to find the employer’s behaviour in breaching the law had aggravating features where:-
- an employer has been in operation for only a short period of time
- is a micro business (less than 10 employees)
- has only a limited human resources function
- the breach was a genuine mistake.
In multiple claims where different workers have brought claims against the same employer together, the employment tribunal will have discretion as to the amount of the financial penalty it can impose on each claim between £100 and £5,000. Only one penalty will be charged where an employee’s tribunal claim is on more than one ground, such as unfair dismissal and holiday pay.
In equal pay cases, where an employment tribunal orders an equal pay audit, no penalty will be imposed unless the employer fails to comply with the order to conduct the equal pay audit.