The section in last year's Enterprise and Regulatory Reform Act which gives tribunals the power to impose a financial penalty on an employer found to have breached a claimant's employment rights is coming into force for claims started on or after 6 April.  The new power applies widely, to any claim involving an employer and a worker. The fine can only be levied if the tribunal considers that the employer's breach has "aggravating features".  And even if there are aggravating features, there is no obligation on the tribunal to issue a fine.  There is no definition of "aggravating features"; this is left to the tribunal's discretion.  However, the Act's official Explanatory Notes make it clear that:

  • the tribunal should only take into account information of which it has become aware during its consideration of the claim  
  • factors which may be taken into account include the size of the employer, the duration of the breach, and the behaviour of employer and employee  
  • a tribunal may be more likely to find aggravating features where the action was deliberate or committed with malice, the employer was an organisation with a dedicated human resources team, or where the employer had repeatedly breached the particular employment right  
  • by contrast, a fine may be less likely where the breach was a genuine mistake or where the employer is a micro business (fewer than ten staff); has been in operation for only a short time; or has a limited HR function.

The tribunal can make an award of an amount between £100 and £5,000.  However, where a financial award is made against the employer to the claimant, the fine must be half that amount, subject to the minimum and maximum levels.  In most cases the tribunal will make an award to the claimant, so in effect the fine will usually be a fixed one.  There are special rules for multiple claims. The penalty, payable to the Government rather than to the claimant, would be in addition to the damages awarded to the claimant.  Rather like a parking fine, the penalty will be reduced by 50% if paid within 21 days.