Thanks to Craig Gordon of HR Bullets, who has given permission to reproduce a summary he prepared on his website.
In light of BIS-sponsored research showing that over half of those awarded a tribunal pay out don’t actually receive what they’ve been awarded, the government has said it will look at measures to clamp down on non-payment.
Among the measures the Employment Relations Minister Jo Swinson is considering are:
- making changes to the employment tribunal rules to give judges the power to demand deposits from businesses who they think might not pay up
- fixed penalty notices for late payment
- naming and shaming employers who fail to pay out (presumably in a similar vein to that now going to be used for non-payers of the national minimum wage), and
- making sure that people are aware how they can take enforcement action if they are not paid what they are due
The government is also looking at what action it can take to make sure people get their 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. Along with raising awareness of this service, ministers are also looking to make sure that rogue directors are not able to continue to evade their responsibilities.
The Payment of Tribunal Awards 2013 study examined whether awards were paid, reasons for non-payment and the effect of enforcement action. One of the most common reasons for non-payment was that employers simply refused to pay. Other findings included:
- Just under half (49%) of claimants who had been granted an award by a tribunal had been paid the 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 after in some cases enforcement action was taken.
- Of those who were not paid their award without resorting to enforcement, almost half (46%) pursued enforcement through the courts (22% of all claimants).
- Claimants with larger award values (over £5,000) who were not paid their award were more likely to report that the company had become insolvent or ceased trading.
- The reason most commonly given for non-payment was that the company no longer existed/had become insolvent or otherwise ceased trading (37%). One in three claimants whose award was not paid (29%) stated that the employer had refused to pay, and 17% were unable to locate the employer.
- The main reason given for not using enforcement to pursue an award is lack of awareness. Overall, only 41% of claimants agreed that they were aware of the options open to them if their employer did not pay their award (falling to only 28% of those who did not use enforcement).