Winning the battle but losing the war... recovery of Tribunal awards
Although the majority of Spencer Wyatt’s litigation is for employers, a recent Department for Business, Innovation and Skills report is noteworthy and of interest. The report emerges from an independent survey of successful Employment Tribunal claimants who were awarded a sum of money and whether they had recovered the sum from their former employer.
The survey consisted of 1,200 telephone interviews of successful claimants during May and June 2013. The response rate was 81%. The survey found that:
49% of claimants had been paid in full.
16% had been paid in part.
35% had not received any money at all. The most common reason for non-payment was that the employer against whom the claim had been made was insolvent, but this only accounted for 37% of the unpaid judgments. In addition, half of the claimants who gave this as the reason for non-payment said they believe their employer was trading again under a different name or at a different location.
Surprisingly, 1% said they didn’t know if they had received any payment at all!
53% of the claimants who had received full or part payment did so without having to resort to enforcement action.
And here’s a hoorah for the lawyers - claimants who had received assistance from lawyers were more likely to receive payment without need to take enforcement action.
Only around half of claimants who did not receive payment voluntarily then went on to seek enforcement of their award so it may be a fair assumption that the numbers eventually receiving payments would be significantly increased if more sought to enforce.
The View wonders whether part of the problem with the system is simply that the Employment Tribunals are not responsible for the enforcement of the awards they make. When an award of compensation remains outstanding payment must be pursued through the ordinary courts. The BIS research suggests claimants suffer from a lack of awareness of the available enforcement options coupled with a perception of difficulty, time and expense involve.
Now for the bit employers need to be aware of. Commenting on the report in a press release on 1 November, the government said:
We are determined to clamp down on businesses who fail to pay out. Far too many cases are not being resolved leaving people out of pocket. Taking an employer to tribunal is a stressful enough process without having to face the possibility of not getting what you are entitled to if you win your case.
Whilst this is primarily about justice for individuals, it is also important that there is a level playing field for the majority of honest employers who follow the rules. Rogue employers should not be allowed to simply get away with not paying.
We will look closely at how we can tighten things up to make sure that people get what they are owed. This includes potentially making changes to the employment tribunal rules to give judges the power to demand deposits from businesses who they think might not pay up.
We are also considering fixed penalty notices for late payment and naming and shaming employers who fail to pay out. And we need to make sure that people are aware how they can take enforcement action if they are not paid what they are due.
The government is also looking at what action it can take to make sure people get their employment tribunal award when a company has stopped trading. If a company is insolvent, the Redundancy Payments Service can already pay certain elements of an employment tribunal award. Along with raising awareness of this service, Ministers are also looking to make sure that rogue directors are not able to continue to evade their responsibilities.
The View will be updating readers on further developments in this area.
For further information on the issues raised in this article, please contact Helen Wyatt on 020 7925 8083 or by email at firstname.lastname@example.org.