Workplace Rights: Dubious penalty decisions

'Reducing burdens on business' is a predictable theme of the current consultation on reforming employment tribunals.

Last Updated: 03 Oct 2011

Some of the Government's proposals chime with that, such as increasing the qualifying period for claiming unfair dismissal and introducing fees for lodging tribunal complaints. But another idea is that tribunals should penalise employers that lose claims. The penalty would be payable to the Exchequer in addition to whatever damages the claimant is awarded - 50% of the total, with a limit of £5,000. It's a neat way of getting employers to fund the spiralling costs of the tribunal system, but would the stated aim be achieved? Tribunals can already increase compensation where an employer has unreasonably breached Acas's code of practice, so a fine on top is unlikely to make much difference. And it would ratchet up the cost of settling cases, with claimants expecting a higher payoff in return for the employer avoiding the penalty. In short, another burden on business.

(See 'Tribunals on trial' feature, p52.)

Michael Burd and James Davies, Lewis Silkin LLP solicitors, email:

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