New government-commissioned research reports that over half of individuals who are awarded compensation following an employment tribunal hearing do not receive their award in full.
The Payment of Tribunal Awards 2013 study carried out by IFF Research, examined the reasons for non-payment of awards, whether awards were paid and the effect of enforcement action.
One of the most common reasons for non-payment was that employers simply refused to pay. The government is now going to consider new powers for judges to demand up-front deposits from employers.
Employment Relations Minister Jo Swinson said: “We are determined to clamp down on businesses who fail to pay out. Far too many cases are not being resolved leaving people out of pocket. Taking an employer to tribunal is a stressful enough process without having to face the possibility of not getting what you are entitled to if you win your case.”
The government is also looking at what action it can take to make sure people get their employment tribunal award when a company has stopped trading. If a company is insolvent, the Redundancy Payments Service can already pay certain elements of an employment tribunal award.
Ministers also wish to investigate ways of making sure that rogue directors are not able to evade their responsibilities.
Currently, if an employer fails to pay an award, claimants can seek to enforce the award via the courts. This can be done in two ways: for an initial fee of £40 they can file a case with the county court; for £60 they can access the services of a High Court Enforcement Officer to act on their behalf for this process.
Findings from the research include the fact that 49% of claimants who had been granted an award by an employment tribunal had been paid this award in full, and a further 16% had been paid in part. This amounts to 64% of all claimants, and leaves more than a third who had not received any money at all, even where enforcement action was taken.
The main reason given for not using enforcement to pursue an award is lack of awareness. Overall, only 41% of claimants said that they were aware of the options open to them if their employer did not pay their award – this percentage fell to just 28% of those who did not use enforcement).
At Palmers, our employment law team can provide advice and guidance as well as representation for all matters relating to tribunals. For more information about our employment law services, please visit our website or contact Lara Murray.