From 6 April 2014, employers found by an employment tribunal to have breached an employee’s employment rights will be liable to pay a financial penalty between £100 and £5,000.
This new regime serves as a counter-balance to more employer-friendly changes to employment law in recent years, such as the increase in the qualifying period for unfair dismissal and the reduction in the compensation limit for most types of unfair dismissal claims.
When viewed against the background of employers also being likely to be held liable for the employment tribunal fees paid by successful claimants, the new financial penalty regime means that employers potentially have quite a lot to lose now should they lose an employment tribunal case. On top of the award made by the tribunal to the claimant and their own legal fees, employers are likely now to find themselves liable for both a financial penalty and the claimant’s tribunal fees as well.
When one looks at the new financial penalty regime alongside the ACAS Early Conciliation scheme and the employment tribunal fee regime (the latter of which has recently survived a judicial review challenge), it is clear that the employment tribunal system is now set up in a way to discourage parties from taking matters all the way to a hearing. The advantages of resolving employment disputes at an early stage have never been more obvious.