New penalties for failure to pay tribunal awards to be introduced in April 2016

From April 2016 organisations that fail to pay tribunal awards or settlement amounts can be subject to financial penalties. The legislation which allows these penalties has already been passed, and following a specific parliamentary question, an intended implementation date of April 2016 has been confirmed.

Individuals who settle claims or who are awarded amounts by the tribunal can currently take enforcement action through the courts and there are fast track schemes available. However, late payment or non-payment is still seen to be a problem, as a result of which new financial penalties will apply.

The penalty will be 50% of the outstanding sum, which will include costs and interest subject to a minimum penalty of £100 and a maximum of £5,000. Whilst the specifics of how the penalty regime will be operating are still a little unclear, we do know that there will be a right of appeal for an employer and the penalty can be reduced by 50% on prompt payment. Further, penalty will not be paid to the claimant but go to the government.

The new penalties will not address situations where an organisation cannot pay, for example due to insolvency, or where a company deliberately ceases trading to avoid payment, but is hoped to act as a deterrent and therefore create a level playing field for compliant businesses.