Employment law update: financial penalties for employers

From 6th April 2014 Employment Tribunals will have the discretion to levy financial penalties for employers for breaches of employment law.

The changes are introduced by Section 16 of the Enterprise and Regulatory Reform Act 2013 which amends Section 12 of the Employment Tribunals Act 1996.

These penalties will be in addition to any compensation which is payable to the employee however the Employment Tribunal will only be able to levy a penalty where there are one or more “aggravating features”. The imposition of the levy will be completely at the discretion of the Employment Tribunal however the Employment Tribunal will have much less discretion over the amount of the penalty, which must be 50% of the amount of compensation awarded to the employee (subject to a £5,000 cap). There is a 50% discount on the levy if paid within 21 days. The levy goes to the Secretary of State and not the employee.

The Employment Tribunal must have regard to an employer’s ability to pay when deciding whether to order the employer to pay a penalty.

This comes shortly after other changes which could affect how much employers who lose claims will pay.

Fees in the Employment Tribunal

Fees were introduced for Employment Tribunal claims commencing after July 2013. When they were introduced it was unclear whether employers would be ordered to pay the fees of successful claimants however recent guidance from the Lord Chancellor indicates that losing employers should be ordered to reimburse the fees paid.

ACAS Code of Practice

Employment Tribunals can increase the compensation payable to employees by up to 25% where the employer has failed to follow the ACAS Code of Practice on Disciplinary and Grievance Procedures.


It has always been the case that employers can pay a heavy price for failing to comply with employment laws. However the situation is now much worse for employers in breach of employment law.

Employers wishing to discipline, dismiss or make redundant employees should ensure that they follow all the necessary procedures and any employer who is unsure should seek advice.

Hastings & Co Solicitors specialise in litigation and employment law.

T. 01245 835 305.

Disclaimer: this blog is only intended to give a brief overview of the law and is not intended as a substitute for independent legal advice.

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