14 October 2008
A report out today from national charity Citizens Advice exposes a shameful flaw in the Employment Tribunal system which means that as many as one in ten of all successful claimants don’t receive their monetary award.
The report, Justice denied, argues that closing the loophole in the system is essential if the Government is to deliver on its promise to protect vulnerable workers, and sets out suggestions for how this could be done.
Most Employment Tribunal claims are settled before they reach a hearing, and many are withdrawn. But every year about 15,000[1] claims end with a judgment and a monetary award in favour of the claimant.
However some rogue employers are exploiting that fact that Employment Tribunals have no powers to enforce the awards made, resulting in as many as 1,500[2] claimants a year not receiving their award when their employer fails to pay up.
The majority of the individuals denied their monetary awards are (or were) employed in low paid, low skilled jobs, commonly: retail assistants; kitchen and catering assistants; cleaners; construction workers; bar and waiting staff; drivers and care workers. A significant minority (at least 10%) are migrant workers, especially from countries such as Poland, Latvia and the Czech Republic.
To try to enforce an unpaid award, claimants must enter into bewilderingly complex and costly legal action in the civil courts. Many give up the struggle through frustration, anxiety or mounting expense.
Citizens Advice Chief Executive David Harker said:
“The ability of rogue employers to ignore tribunal judgements with impunity seriously undermines the credibility of the Employment Tribunal system with both workers and employers. The current system is grossly unfair, both to those claimants who don’t receive the compensation due to them and to the vast majority of employers who play by the rules and pay the awards made against them.”
Citizens Advice is calling for state-led enforcement of Employment Tribunal awards, to ensure that all successful claimants get the money they are entitled to.
In the report, the charity proposes how state-led enforcement could be conducted and estimates that the total net cost to the Government would be less than £0.5million a year.[3]
David Harker continued:
“Closing this loophole is essential if the Government wants to protect vulnerable workers and support good employers. Bringing in a state-led system of enforcement would cost the Government less than 4% of the savings it expects to reap from its current Employment Bill.[4] We very much hope the Government will act now to address this issue.”
The report is being launched today (Tuesday 14 October) at the Citizens Advice APPG, chaired by Karen Buck MP. The report aims to influence the current Employment Bill which is at the second reading stage. An amendment to the Bill supporting Citizens Advice proposals for state-led enforcement of unpaid awards has been put forward by MPs Sarah Teather and Lorely Burt.
A client from Tooting was formerly employed as Head Chef in a pub. He took his ex employer to tribunal for constructive dismissal in November 2007 and was awarded £10,000. However, he was not advised about how and when he would get the money.
He called up the tribunal and was told he’d have to register the case at the High Court (for cases over £5,000) if he wanted to get paid.
The High Court sanctioned Enforcement Officers to recover his money from his ex employer but after visiting his ex-employer at three different business addresses, where each time he denied his identity, they were unable to seize anything.
The client then had to pay out more money on an ‘Order to Attend’, meant to force his ex-employer to attend another Tribunal, but the employer didn’t turn up. This has now been rescheduled three times, with his employer failing to turn up each time.
Almost a year after he ‘won’ his tribunal claim, the client is getting extremely fed up with the court system which he says is “ludicrous”.
A client from Reading had been employed as a field sales manager by a small marketing firm. Shortly after she started, the company underwent a restructure and she found her job role changed. One morning in September 2006, after two years at the company, she was called into her boss’s office and told she was being ‘let go’.
She says: “I packed up my stuff and was out of there by 11. Then I parked my car down a lane and tried to take it all in, I was in shock!”
After being advised by Henley CAB that she had a case for unfair dismissal she began, with the bureau’s help, the process of bringing a tribunal claim. Nearly a year after dismissal the case made it to Tribunal, but her ex employers didn’t turn up so the case was adjourned. The
employers didn’t turn up for the next two hearings, at which point the judge decided to go ahead and hear the case anyway.
After considering the case in July 2007 the judge awarded the client with £10,000 and applauded her for taking the case through the tribunal system. “But at the end of the case he said ‘good luck
with getting the money’, this shocked me. I hadn’t realised there would be more hurdles to overcome.”
To complicate matters the clients ex employer had gone into liquidation. However they were still employing all their staff. The business then re-opened under another name.
The client is now having to chase her money through the liquidators, but has not heard anything back as yet.
Ends
The report can be read and downloaded at: www.citizensadvice.org.uk/justice_denied
Image available if required
[1] Using figures from the Employment Tribunal Service Annual Report the average number of successful Employment Tribunal claims over the last four years is 14,713
[2] Citizens Advice sees around 1,000 cases related to unpaid Employment Tribunal awards each year. Allowing for cases dealt with by ACAS, law centres, trade unions and independent claims, this would suggest that the total number of awards that go unpaid each year is more than 1,000 and possibly as high as 1,500.
[3] The very existence of state-led enforcement would lead to a significant decrease in unpaid awards (the self-regulation effect).
Assuming the number of unpaid awards each year is reduced from 1,500 to under 1,000 due to the ‘self-regulation effect’ and the Government spends as much, or less on enforcement as the current £1000 per case it spends on processing each claim, the total initial outlay would be less than £1million per year. Furthermore, assuming that state-led enforcement action would be successful in at least half of the remaining cases, and that full costs would be recovered from the employers, this brings the net costs down to less than £0.5m each year.
[4] 
www.berr.gov.uk/files/file44363.pdf
www.adviceguide.org.uk
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