When can an employment tribunal order an employer to pay a financial penalty in addition to compensation?

Where an employment tribunal finds that an employer has breached the claimant's employment rights, the tribunal can order the employer to pay a financial penalty if it is of the opinion that the breach has aggravating features (s.12A of the Employment Tribunals Act 1996).

The financial penalty is payable to the Secretary of State and is in addition to any compensation awarded to the claimant.

The penalty will usually be 50% of the award made to the claimant, subject to a minimum of £100 and a maximum of £5,000. Employers will qualify for a reduction of 50% if they pay the penalty no later than 21 days after the notice of the decision to impose the penalty is sent to them.

Whether or not there are aggravating features involved in the employer's breach will be for the employment tribunal to decide in each case. The legislation does not define "aggravating features", but the explanatory notes to the Enterprise and Regulatory Reform Act 2013, under which the power was introduced, suggest that "an employment tribunal may be more likely to find that the employer's behaviour in breaching the law had aggravating features where the action was deliberate or committed with malice, the employer was an organisation with a dedicated human resources team, or where the employer had repeatedly breached the employment right concerned".