Business minister Baroness Neville-Rolfe has described as scandalous the fact that so few tribunal awards are paid promptly by employers. However, perhaps she should have looked to her own Government before criticising others.
The Small Business, Enterprise and Employment Bill includes provisions that employers who do not pay awards when they are due will receive a warning notice from an enforcement officer. Continued failure to pay will lead to a penalty of 50% of the award. There will be further penalties for repeated non-payments.
Speaking in the House of Lords on 26 January during the Bill’s latest committee stage she said:
I believe we share the same aim—that of ensuring the best outcomes for individuals who have been through an employment tribunal, and ensuring that they receive their awards. Our research indicates that, without enforcement, only 40% of awards are paid within six months. That is clearly scandalous. Our financial penalty clause is intended to incentivise prompt payment of employment tribunal awards and to prevent employers ignoring judgments by employment tribunals. It applies to all tribunals, awards and settlements conciliated by ACAS. Employers who have not paid the award will receive a warning notice from the enforcement officer. By paying the award in full, promptly, they will avoid a penalty. However, if they do not pay in full, they will be hit with a penalty of 50% of the award. If they continue not to pay, or to pay only part of the award, they can receive further penalties, each of 50% of the unpaid amount, as well as incurring interest on the outstanding award. We consider that encouraging prompt payment in this way is an effective way of dealing with a problem that we agree exists.
As I reported last September the problem is endemic, not just in terms of the delay in paying awards but in paying them at all. Research shows that 49% of successful claimants receive payment in full, 16% receive a part payment and 35% receive nothing at all. A key problem which is not addressed by the Government’s latest proposals is the number of respondents that cease trading, leaving claimants as unsecured creditors. In our relatively relaxed corporate regime it is fairly easy for such businesses to unload their creditors and carry on, particularly by the use of pre-pack administrations.
However the Government would do well to consider its own tardiness in making payments following successful claims. In February 2013 the Supreme Court delivered its judgment in the case of O’Brien v Ministry of Justice confirming that fee paid tribunal judges are entitled to pension payments. The entitlement to receive payments was confirmed in the Employment Tribunals in January 2014 and again in the Employment Appeal Tribunal in March 2014. Although inviting judges to submit details of their claims in March 2014, many remain entirely unpaid. Perhaps the Ministry of Justice should be issuing penalties against itself!Details