Over half of workers awarded compensation at an Employment Tribunal do not receive it, study shows

01 November 2013

A new government-commissioned study has found that over half of those awarded compensation at an Employment Tribunal (ET) never receive payment in full.

The Payment of Tribunal Awards 2013 investigation, which was carried out by IFF Research, discovered that one of the most common reasons – affecting a third of cases – workers do not receive payment was because employers simply refuse to pay up!

As many as a third of claimants who had been awarded compensation did not receive a penny, and 16% were paid only part of the money they were owed.

If an employer refuses to make a payment, claimants can file a case with the county court for an initial fee of £40, or pay £60 to have the High Court Enforcement Officer act on their behalf. Only claimants on low incomes can seek remission on these fees.

When justice comes at a cost to workers, it is no surprise that not all of those who did not receive compensation pursued their case. But what is astonishing, is that even after court enforcement had been paid for, some workers were still not compensated by their employers.

Around 22% of all ET claimants were forced to pursue enforcement after being awarded compensation, which is 46% of those who did not receive any part of their award – that leaves 54% who did not seek enforcement despite not having been paid the money they were owed.

Largely, the problem is caused by the fact 59% of claimants are not aware they can pursue enforcement if their employer refuses to pay up. Only 28% of those who did not use enforcement were aware they had the option to do so.

Employment Relations Minister Jo Swinson vowed to make changes to ensure employers convicted of wrongdoing at an ET are forced to compensate their workers.

Some of the proposals put forth were to give judges the power to demand a deposit from businesses they think may not pay up, the introduction of penalties for late payment, the naming and shaming of employers who fail to pay out, and reviewing how compensation can be paid to claimants if the company they worked for has since ceased trading (due to insolvency, for example).

As many as 37% of the victims of non-payment reported that the company responsible no longer existed. It is currently possible to receive elements of compensation from the Redundancy Payments Service in such circumstances, but more needs to be done to ensure the full amount of money owed to workers is delivered to them.

The Institute of Employment Rights welcomes all proposals to make the ET process fairer for workers, but with ET fees now put in place by the Coalition, and enforcement through the courts requiring further payment, it is a concern that tackling employers’ refusal to pay compensation will only remedy a small part of the injustice workers receive at the hands of the current system.

For more on limitations on workers’ access to justice see Justice Deferred: a critical guide to the Coalition’s employment tribunal reforms and Access to Justice in Employment Disputes: Surveying the Terrain