Organisations face additional penalties for failing to pay tribunal awards

Peninsula Team

January 15 2019

Following a continuing trend of employers failing to settle court ordered tribunal awards on time, the government have introduced a new enforcement procedure to penalise those who fail to pay within the set deadline. Introduced on 18th December 2018, employers could be publicly ‘named and shamed’ under this new scheme if they continue to ignore a series of reminders to this effect.

Individuals who are owed compensation for successful tribunal claims are encouraged to report relevant employers online, using the government’s designated website, if they have failed to settle the tribunal award within 14 days of the original judgement.

Once reported, employers will receive a warning notice confirming they have 28 days to pay the award, or face further action against them. If following these 28 days, the award remains to be settled, employers will be sent a further penalty notice ordering them to pay the award including a penalty of 50% of the original award, plus interest.

As well as the penalty notice, employers who fail to pay the award after the 28 days will receive a naming notification letter informing them that they will be publicly named and shamed unless they submit valid representations as to why they cannot within 14 days.

It has been confirmed that the naming and shaming lists will be revealed in an official press release, similar to how the HMRC have addressed national minimum wage (NMW) offenders in recent times. From an employer’s perspective, being included on this list is likely to result in significant reputational damage in the eyes of customers and the general public.

Aside from paying tribunal awards on time, employers should always be looking to avoid tribunal disputes in the first place to reduce the opportunity of them being including on the naming and shaming list. With this in mind, employers should routinely review existing policies and workplace practices to ensure they are in line with current legislation. At the same time, having an open door policy which encourages staff to raise any pressing issues will give firms the opportunity to address matters before they reach tribunal stage. In these situations, employers are reminded to treat any grievance claims seriously, making sure to carry out a full investigation and follow a fair procedure to protect themselves against any legal action.

If anything the introduction of this naming and shaming list should act as a timely reminder for employers of the risks associated with poor business practices. Whilst a tribunal loss can be damaging to an organisation’s pride, the public response to being named and shamed for refusing to pay a tribunal award could be of greater damage in the long run.

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