Seen in the round, the Coalition’s employment tribunal reforms are unbalanced. In almost every area, they tilt the law – in some cases dramatically – in favour of employers and against workers. The Coalition is well aware that its reforms both look and are unjust. No government ever wants to go down in history as merely a cabal of the rich. Accordingly, one proposal has been included which is supposed to right the balance. Under clause 13 of the Enterprise and Regulatory Reform Bill, if an employer is found to have breached a worker’s rights and the employment tribunal considers there to have been aggravating factors, the tribunal could order the employer to pay a penalty to the Secretary of State.
The amount of the penalty would be up to 50 per cent of any financial award made in favour of the claimant and subject to a £100 minimum and a £5,000 limit. In the event that an employer paid 50 per cent of the penalty within 21 days, the penalty would be discharged.
Aggravating factors might include where the action as deliberate or committed with malice, the employer was an organisation with a dedicated human resources team, or where the employer has repeatedly breached the employment right concerned.
Three points should be noted when evaluating this reform.
First, while this system of penalties is supposed to assist workers, it does no such thing. They would not get the benefit of the penalties; the government does. It would have been much easier – and better – if the Coalition had simply noted that Tribunal remedies are artificially low, and removed the various statutory rules (eg the cap on the weekly wage for the purposes of unfair dismissal awards) which keep them low.
Second, the longer the government has mulled over the plan, the further ministers have watered it down. In the Coalition’s original consultation document, the suggestion was that all breaches of employment law should attract a penalty. By the time of the Bill, the penalty has been limited to aggravated breaches. In so doing, the government has changed the the scheme from which one which would apply almost always (when a worker won a claim) to one which would almost never be applied.
Third, it is extraordinary that an employer should be able to reduce its fine by prompt payment. The scheme should operate the other way around – by penalising the slow rather than by rewarding employers who (by this stage) will inevitably have been found guilty of conduct so bad as to justify a quasi-criminal fine.
There are no equivalent provisions anywhere in the rules protecting (for example) workers who pay costs or deposit orders promptly.
Really, all the prompt payment provision does is remind everyone of how many employers (c40%) never pay their ordinary Tribunal damages following an unfavourable decision. The government, aware of the potential costs to it of having to chase defaulting employers for relatively small sums of money through the county courts, has come up with a scheme to protect its own position. But what about the tens of thousands of workers each year who win their Tribunal claims – and are never paid?