IER Resources The Enterprise and Regulatory Reform Act | Page 9

Financial penalties for bad employers Changes
Employers who breach their workers ' employment rights may be fined up to £ 5,000 if their breaking of the law can be shown to have had " aggravat ing features, such as malice or negligence ". However, the fine will not be imposed where breaches of the law are deemed to have been " inadvertent ".
Criticism
The wording of this proposal makes it clear just how weak this policy is, especially compared with the barrage of attacks on workers ' rights. It seems employers will simply not be punished for breaking the law, unless their workers pay up to take them to tribunal, or the employer ' s pleads that they " didn ' t mean it " are not believed.
In our submission to the consultation on the Bill, Anya Palmer stated: " We consider these penalties are not high enough to offer any real disincentive to employers. We believe a much greater disincentive exists in the current system where claimants can be properly compensated in an appropriate case."
" Moreover, as the financial penalties will not be imposed automatically, only in certain circumstances, they introduce uncertainty into the process and make it less likely that cases will be settled," she added.
Other problems appear when businesses become insolvent, as in this case unfair dismissal penalties and compensation would be paid by administrators using a limited cash fund. Where financial penalties reduce that fund, workers could lose out in compensation and backpayments. Baroness Hayter of Kentish Town highlighted this issue in a House of Lords debate, adding that although tribunals could use discretion, the fact a £ 100 to £ 5,000 fine is worded in the law creates uncertainty for insolvent businesses and their employees.
In the same debate, Lord Young pointed out the ideological angle this policy is taking. Why fine employers for wrongdoing instead of trying to tackle the problem at its root? He recommended that the focus was switched to managerial training.
The Institute of Employment Rights is also concerned about the ideology behind this policy. We believe that when an employer breaks the law, they should compensate the wronged party- the employee- first and foremost. Adding to the Treasury ' s coffers through the imposition of fines should be a secondary concern.
Judges sitting alone at Employment Appeal Tribunals Changes
The requirement for lay members to sit in on Employment Appeal Tribunals has been removed, allowing judges to preside alone by default. Lay members may still sit in on Employment Appeal Tribunals if they are directed to do so.
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