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Think you can get away with it? Think again!

As a general rule those of our clients who follow our HR advice don’t find themselves in hot water with employment tribunals. It’s when they don’t follow our advice they tend to have problems.

If you lose at tribunal, compensation is sometimes the lesser part of the cost. When you think about the management time and legal fees incurred in preparing for trial, the expense can be daunting. One of our colleagues says that even if you have worked hard at managing your case well, going to a tribunal is like going to the casino. The fact is that sometimes even if you have a good case, there’s a risk of losing.

Some respondents never pay up. Research has recently been carried out on behalf of BIS into the payment of tribunal awards. The findings suggested that over half of those awarded compensation by an employment tribunal don’t actually get it.

How widespread is the problem of non-payment? Daniel Barnett cites the following figures:

49% of claimants who had been granted an award by a tribunal had been paid the award in full; 16% had only been paid in part at the due payment date; 35% don’t receive any money at all.

The reasons most commonly given for non-payment are that:

  • 37% had ceased trading;
  • 29% just simply refuse to pay;
  • 17% were unable to locate the employer.

The problem is sufficiently acute to merit intervention by the Government which is looking into ways in which companies that renege on their obligations can be forced to pay. Claimants are able to use enforcement to ensure employers pay up but only 41% of claimants say they are aware of this option. 28% of claimants do not use enforcement.

Employment Relations Minister, Jo Swinson is considering a number of measures to ensure what is awarded is paid.

  1. Giving Employment Tribunal judges the power to demand deposits from businesses up front from those they think might not pay an award given by the ET.
  2. Fixed penalty notices for those employers who make a late payment to the claimant.
  3. Naming and shaming employers who fail to pay out, similar to if you don’t pay minimum wage.
  4. Allowing claimants who are not paid what they are due to take enforcement action.

If for whatever reason, the company is no longer trading this does not mean it is exempt from paying an award at this point either. The Government will also be looking at what action can be taken to ensure successful claimants get their award under these difficult circumstances.

Prevention is better than cure. Avoid the risk of an employment claim by talking to us.

Russell HR Consulting provides expert knowledge in HR solutions, employment law training and HR tools and resources to businesses across the UK.

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