New financial penalties for employers who lose employment tribunal claims coming into force on 6 April 2014

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The Enterprise and Regulatory Reform Act 2013 (ERRA), which received Royal Assent on 25 April 2013, includes a provision giving employment tribunals discretionary powers to levy financial penalties against employers who lose claims. This provision is not yet in force. However, the government has recently confirmed that it will come into force on 6 April 2014.

Aside from the various remedies that can be awarded, employment tribunals currently have no powers to penalise employers for breaches of employment law. From 6 April 2014, however, employment tribunals will be able to order employers to pay a financial penalty of between £100 to £5,000, where it loses a claim and where ‘aggravating features’ are present.

Employment tribunals will be able to impose the penalty irrespective of the nature of the remedy awarded, although where a financial award is made the penalty must be 50 per cent of that award (subject to the overall cap of £5,000). The employer’s ability to pay the penalty must also be taken into account…

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