New government commissioned research has found that over half of individuals awarded a pay out 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 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, so the government is to consider new powers for judges to demand deposits from employers unwilling to pay up-front.
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.
Whilst this is primarily about justice for individuals, it is also important that there is a level playing field for the majority of honest employers who follow the rules. Rogue employers should not be allowed to simply get away with not paying.
We will look closely at how we can tighten things up to make sure that people get what they are owed. This includes potentially making changes to the employment tribunal rules to give judges the power to demand deposits from businesses who they think might not pay up.
We are also considering fixed penalty notices for late payment and naming and shaming employers who fail to pay out. And we need to make 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 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. 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.
Currently, if an employer fails to pay out, 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 or for £60 they can, via the Fast Track scheme, access the services of a High Court Enforcement Officer to act on their behalf for this process. Claimants can seek a remission from these fees if they are on low incomes.
Research Findings include:
- 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 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; this equates to 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 (46% compared with 35% of those with awards under £5,000)
- 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 3 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).
Notes to editors
Market research firm IFF Research spoke to over 1,000 claimants who had been successful at employment tribunal between May and June 2013.
The coalition government started a systematic review of employment law in 2010. This Employment Law Review is now half way through its work and aims to provide clarity, certainty and give businesses the confidence to manage their workforce effectively. The review sits alongside the Employment Law-related Red Tape Challenge to reduce regulatory burdens on business.
The government’s economic policy objective is to achieve ‘strong, sustainable and balanced growth that is more evenly shared across the country and between industries’. It set 4 ambitions in the ‘Plan for Growth’, published at Budget 2011:
- to create the most competitive tax system in the G20
- to make the UK the best place in Europe to start, finance and grow a business
- to encourage investment and exports as a route to a more balanced economy
- to create a more educated workforce that is the most flexible in Europe
Work is underway across government to achieve these ambitions, including progress on more than 250 measures as part of the Growth Review. Developing an Industrial Strategy gives new impetus to this work by providing businesses, investors and the public with more clarity about the long-term direction in which the government wants the economy to travel.