Employment Relations Minister Jo Swinson has warned that the Government is looking to crack down on employers who fail to pay Employment Tribunal Awards.
This follows the publication of research undertaken for the Department for Business Innovation and Skills that showed that only 49% of Tribunal Awards in England and Wales are paid in full and 35% are not paid at all.
12% had to resort to taking enforcement action through the County Court to achieve full or partial recovery.
If it were not for the fact that the Government pays redundancy and certain other payments in the event of insolvency the amount of recovery would be even lower.
Bearing in mind the Government’s obligation as a matter of EU Law to provide an effective remedy in discrimination law this could leave the Treasury vulnerable to claims from disaffected successful Claimants.
The most common reasons for non-payment were that the Company no longer existed or was insolvent (38%) or refused to pay (29%)
The most common reason given for not attempting enforcement through the Courts was not knowing this was possible (24%)
The report recommends that awareness of the available enforcement options should be improved through better communication.
Ms Swinson said that this was not simply about justice for employees but also about providing a level playing field for competition between employers – so that those who comply with their legal obligations are not disadvantaged compared to those who do not.
The possibility of fixed penalty notices for late payment, and naming and shaming defaulters (which has been tried in the context of the National Minimum Wages) has been raised. In addition there is talk of looking closely at whether “Phoenix companies” should escape liability and even whether Directors should have personal liability.
In the past CAB had called for a system where the Government paid in full and then took responsibility for collection. This seems unlikely to happen in these austere times but there may be some tweaking of the current insolvency payments system.