Financial penalties for employers in employment tribunals

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Section 16 of the Enterprise and Regulatory Reform Act 2013 which introduces financial penalties for losing employers at employment tribunals will take effect from April 2014. The employment tribunal will have the power to award a penalty of up to £5,000 against a losing employer where there have been ‘aggravating factors’ in relation to the breach complained of. The penalty will be payable to the Secretary of State (not the claimant) and must be 50 per cent of any financial award made to the claimant (subject to the £5,000 cap). It is not clear what will amount to ‘aggravating factors’ although unreasonable conduct coupled with ‘negligence or malice’ are likely to be included. Employers should be on guard against such penalties in relation to all claims issued from April 2014.