Employment tribunals, with due respect to their role in determining workplace disputes, have burdened small business for many years. The maximum unfair dismissal award was quadrupled soon after Labour took office and now stands at £65,300. The qualifying period was reduced to one year. The torrent of EU-inspired legislation via the Social Chapter provided yet more problems – relatively easy for a major organisation with a dedicated personnel department, a nightmare for a hard pressed small business owner. And the much despised statutory disciplinary procedures with their financial uplift provisions only added to the burden, until their grudging repeal.
What a relief, then, for those who make up an integral part of the UK’s economic well being and the fightback against Labour’s recession, to hear that the Department for Business, Innovation & Skills was consulting on Resolving Workplace Disputes and how to make the UK the best place to start and grow a business, as the consultation paper’s foreword asserted. No risk, then, of any underhand stealth tax on businesses who fell foul of tribunals, as might have appealed to a particularly vindictive Brownite minister.
Or so we thought.
On page 52 of the consultation paper, described as “an astonishing proposal” in the Daily Telegraph, is a section headed “Financial Penalties”. A few extracts: -
“The Government believes that employers should take appropriate steps to ensure that they meet their obligations in respect of their employees. We therefore propose to introduce the power for Employment Tribunals to impose financial penalties on those employers found to have breached an individual’s rights.”
“There are, however, no powers available to the tribunal to penalise an employer for the original breach. Introducing such powers would allow the tribunal to send a clear message to an employer, and employers more generally, that they must ensure that they comply with their employment law obligations.”
“We propose to introduce a provision for the tribunal to levy financial penalties on employers found to have breached the relevant rights, to encourage greater compliance. Penalties would be payable to the Exchequer, rather than the claimant, providing some element of recompense for the costs incurred to the system through the employer’s failure to comply with their obligations…”
The proposal goes on to indicate that the penalty should be half the amount of the total award, subject to a cap of £5,000, reducing by 50% for prompt payment within 21 days.