Financial penalties for employers

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  • Tribunals have a discretionary power to impose financial penalties on employers where they are found to have breached a claimant’s employment rights and the tribunal considers that, in the circumstances, the employer’s behaviour in committing the breach had one or more aggravating features.
  • The key will be what a tribunal considers to be an ‘aggravating feature’. This is not defined but the Explanatory Notes to the Enterprise and Regulatory Reform Act 2013 suggest that a tribunal may be more likely to find aggravating features where the action was deliberate, negligent or committed with malice; the employer was an organisation with a dedicated HR team; or the employer had repeatedly breached the employment right concerned. Merely losing at tribunal is unlikely to be sufficient to trigger a penalty, but pursuing an unreasonable defence or otherwise conducting proceedings in an unreasonable manner may well trigger a fine.
  • Where compensation is awarded, the penalty must be set at 50% of that amount, subject to a minimum of £100 and a maximum of £5,000. If the employer pays the penalty within 21 days, it is reduced by 50%.
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