Employers that lose employment tribunals could face a penalty of half of the award given to the claimant, as part of government plans for workplace dispute reforms.
The Government has published its consultation on reforming workplace-dispute resolution, and reduce the number of tribunal claims and speeding up the tribunal process.
The consultation document also contains plans to give employment tribunals the power to impose penalties on employers that lose their cases. The proposal is that employers would have to pay a penalty of half of the total award, within a minimum threshold of £100 and a maximum of £5000. This would be reduced by half if the employer paid within 21 days.
Employers organisations are not happy with the plans. Steve Radley, EEF director of policy, said: "On the day the Government announced an employers' charter to reassure business about the balance of employment legislation, it undermined this principle by burying a potential new tax at the back of a lengthy consultation.
"A package designed to reduce the burdens on business now contains a 'double jeopardy' proposal which would impose extra costs at a time when companies are already under immense pressure."
The danger is that these plans may sway an employer's decision on whether or not to settle a tribunal claim irrespective of its merits and perhaps to make a higher offer than they otherwise would, even if the claim appears weak, so as not to run the risk of additional penalties.