New legislation comes into force for claims presented on or after 6th April 2014, which will mean for the first time employers will be ordered to pay a financial penalty for losing their case before the Employment Tribunal.  The power was provided in s16 of the Enterprise and Regulatory Reform Act 2013 which has now been brought into force by an Order made last week.

The new penalties only apply in certain circumstances and the penalty is paid to the Secretary of State not the Claimant in the case.  The decision to impose a penalty is that of the Tribunal and can be levied where the employer’s breach has “one or more aggravating features”  There is no explanation or definition of aggravated features in the legislation but in response to consultation on the issue the Government suggested that Tribunals would impose such penalties where the breach involves unreasonable behaviour for example where there has been negligence or malice on the part of the employer.

A further report by the Government suggested that genuine mistakes by the employer would not be penalised.  The explanatory notes stated that the Tribunal can take into account any factors it considers relevant including the circumstances of the case and the employer’s circumstances which could include “the size of the employer; the duration of the breach of the employment right; or the behaviour of the employer and the employee”.  The test for aggravated features is not the same as the test for aggravated damages in a discrimination claim.

This new legislation comes into force at the same time as the pre-conciliation through ACAS of ET claims so you can expect another period of change.