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Financial penalties for employers to come into force in April 2014

As part of the recent Tribunal reforms, it was announced that Tribunals would have the power to order an employer, who has lost a case at Tribunal, to pay a financial penalty of up to £5,000.

The power to order a financial penalty will only apply where the case has 'aggravating features'. It is not clear what is meant by 'aggravating features' and this is not defined in the legislation. The government guidance is that Tribunals will order penalties where the breach involves "unreasonable behaviour, for example where there has been negligence or malice".

The penalty may be imposed even if the Claimant has not been awarded financial compensation. If a financial award has been made however, the financial penalty will be 50% of the amount of the award (subject to a £5,000 maximum). The minimum penalty will be £100. An employer however will not have to pay the full penalty if it pays 50% of the penalty within 21 days and the Tribunal is required to take into account the employer's ability to pay.

It has now been announced that the power to award these financial penalties will come into force in April 2014. Tribunals will not be able to order a penalty in any case that is brought before April 2014.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at October 2013. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.

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