The Department for Business, Energy and Industrial Strategy (BEIS) has launched a naming scheme for employers who fail to pay employment tribunal awards. The naming scheme was recommended in 2017 by the Taylor Review of Modern Working Practices. All tribunal awards registered with BEIS on or after 18 December 2018 and over £200 in value are in scope of the scheme. The naming scheme will run alongside the BEIS penalty scheme for unpaid tribunal awards (established in April 2016).
Penalty scheme recap
The penalty scheme allows individuals to register unpaid awards 42 days after the date of an employment tribunal judgment. Once the claim is verified by an enforcement officer, the employer will receive a warning notice stating that if they do not pay the outstanding award within 28 days, they will be sent a penalty notice. The penalty notice orders the employer to pay a penalty to the value of 50 per cent of the original award and 8 per cent interest per annum, up to a maximum of £5,000. The financial penalty is paid not to the employee but to the government.
When will an employer be named under the naming scheme?
The employee must have registered the unpaid award with both the penalty scheme and the naming scheme.
At the same time as receiving the penalty notice under the penalty scheme, the employer will receive a naming notification letter. The letter informs the employer that they will be named unless they submit valid representations within 14 days, with the requisite evidence. You can find the circumstances in which representations may be accepted by BEIS here.
If no valid representations are received within 14 days the employer will be automatically named in the next naming round along with the amount of the unpaid award. Employers should also be aware that even if they pay promptly after receiving the notification letter they may still be named. The naming rounds are in the form of quarterly press releases on the gov.uk website.
What are the implications for employers?
The new naming scheme acts as an additional incentive, on top of the penalty scheme, for employers to pay tribunal awards quickly. Employers should be warned that they will now be in double jeopardy if they do not pay the tribunal award in good time, as not only can they receive a penalty but they may also receive bad publicity.
The best way of avoiding this is not to become embroiled in the tribunal process in the first place. Tribunals are messy stressful time consuming and expensive.