High up on the list of candidates for 2014’s Most Nakedly Transparent Political Gesture Awards was the introduction of a new Section 12A into the Employment Tribunals Act 1996.
This was a measure designed to bring bad employers to heel in the Employment Tribunal by the imposition of financial penalties of between £100-£5,000 where the employer’s conduct was found not just unlawful (as that can happen to anyone entirely inadvertently) but also had “aggravating features”. No doubt many parties to Employment Tribunal litigation consider their opponents to have aggravating features, but applied to employer conduct, it means essentially deliberation, malice and repeat offences, more strictly applied for large employers with professional HR departments which should have known better.
The new rules got off to a flying start. From their implementation in April 2014 to the end of that year, a spectacular no penalties at all were ordered by the Tribunals. By mid-2015 this had rocketed up to three, only one of them actually paid. So on that basis, the recent disclosure that we are now up to 18 (12 paid) since April 2014 is real progress. By any other yardstick, however, it is clear that the measure has been an abject failure – those 12 paid penalties have generated £17,750 for the Treasury in nearly three years, missing the anticipated annual receipts of £2.8 million by only 99.8%.
Part of this might be down to a reduced number of Employment Tribunal claims following the introduction of fees, but that was known about at the time the penalties were introduced, and even assuming a drop-off rate of 70%, this does not begin to justify a miss of that magnitude.
Caroline Lucas MP is quoted in the Law Society Gazette as saying that this means that “rogue exploitative employers” are getting away with “evading justice“, but that is clearly political hyperbole just as silly as that driving the introduction of the fines in the first place. We think that where Tribunals find malice or other high-handedness by employers, Employment Judges would far sooner help the claimant by an award of costs or aggravated damages than help the Treasury through a fine. Moreover, the costs knife can cut both ways, allowing malicious or otherwise unreasonable claimants to feel the sharp edge too. One might say that the Employment Tribunal’s costs jurisdiction could sometimes be exercised a little more incisively, but in reality it is all that the Tribunals need to convey strong messages about a party’s conduct. The idea that a penalty of a few extra hundreds or thousands (halved if paid quickly, so as clearly a fund-raising exercise as parking tickets) is going to deter the genuinely malicious or recidivist employer (especially a large one), is and always was fundamentally ill-conceived, as these new figures show.
Which takes us back to the question of Tribunal fees and the Government’s long-awaited report on their impact on justice. This is currently a year late, and still not finished. Justice Minister Oliver Heald told the House of Commons last week that when “I said that I would produce it as soon as possible in the New Year, I meant it“, though apparently he forbore to mention which New Year he had in mind, exactly.