Following the recent publication of research by the Department for Business Innovation & Skills (“BIS”) which stated that only 64% of successful Claimants recovered compensation following an Employment Tribunal decision^[1] the Government has accepted that this has got to change. One problem that we occasionally encounter is when the Employer ceases to trade their limited company and dissolves it through Companies House. In such circumstances the successful Claimant has almost no recourse as the directors of the Company are protected by the doctrine of limited personal liability. What can be even more galling is when the owner of the business starts up a new company doing exactly the same work as before, servicing the same clients or cusomters

What can be done about a failure to pay?

The Employment Relations Minister Jo Swinson has voiced some ideas which the Government might try to introduce to increase the percentage of successful Claimants actually receiving their reward. These ideas are as follows:

Changing the Employment Tribunal rules so that judges can demand a deposit from an Employer if there are suspicions that it is not going to be able to pay any award of damages. (They haven’t actually said how they would decide this but it is possible they might consider how their business runs, or any comments made to employees previously. They may also consider whether the employer has form for shutting down a company before or after tribunal proceedings)
They may introduce a fixed penalty notice for late payment of awards. Although again if it’s against an employer who is just going to shut the business then they will have to consider whether this fixed penalty notice is against the directors or the company.
Like the decision by the BIS to name and shame non-payers of the National Minimum Wage there is an idea on the table to name and shame employers who fail to pay tribunal awards.
Finally they want to increase the knowledge of successful Claimants so they know how to enforce the award if their employer fails to pay what is due to them. It is interesting to note that less than half of all successful Claimants actually knew there was a way for them to enforce the award if the employer fails to pay.

On top of these measures we are also hoping that the Government is considering other measures to assist Claimants get their money if their former employer has ceased trading as it is not fair that rogue directors can shirk their responsibilities to those they have wronged.

What Next?

If you have been successful at Tribunal and have been awarded compensation by the Employment Tribunals but your employer is unwilling to pay up there are options available for you. If you want more information please contact our team on [phonenumber] where we will be able to advise you on the process and whether we will be able to assist further with your situation.