Employers exploit legal loophole to avoid paying employment tribunal awards
A new report from Citizens Advice has revealed that up to 10% of employment tribunal compensation awards are not paid because of a “shameful flaw” in the law.
Employers are exploiting the fact that the tribunals have no power to enforce the monetary awards they make.
Citizens Advice has called on MPs to use the Employment Bill, which is at the second reading stage, to change the law.
An amendment to the Bill supporting proposals for state-led enforcement of unpaid awards has been put forward by Lib Dem MPs Sarah Teather and Lorely Burt.
The report, “Justice Denied,” argues that closing the loophole in the system is essential if the Government is to deliver on its promise to protect vulnerable workers, and sets out suggestions for how this could be done.
Gay, bisexual and lesbian people have been protected from discrimination in employment since 2003, which has led to a string of successful claims.
Every year about 15,000 of the cases that come to tribunal end with a judgement and a monetary award in favour of the claimant.
The majority of the estimated 1,500 individuals a year denied their monetary awards were employed in low paid, low skilled jobs such as kitchen staff, bar workers, drivers and care assistants.
A significant minority (at least 10%) are migrant workers, especially from countries such as Poland, Latvia and the Czech Republic.
To try to enforce an unpaid award, claimants must enter into a complex and costly legal action in the civil courts. Many give up the struggle through frustration, anxiety or mounting expense.
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Citizens Advice chief executive David Harker said: “The ability of rogue employers to ignore tribunal judgements with impunity seriously undermines the credibility of the Employment Tribunal system with both workers and employers.
“The current system is grossly unfair, both to those claimants who don’t receive the compensation due to them and to the vast majority of employers who play by the rules and pay the awards made against them.”
Citizens Advice estimates that the total net cost to the government would be less than £0.5million a year.
Mr Harker said: “Closing this loophole is essential if the government wants to protect vulnerable workers and support good employers.
“Bringing in a state-led system of enforcement would cost the government less than 4% of the savings it expects to reap from its current Employment Bill.
“We very much hope the government will act now to address this issue.”