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HMRC should enforce payments from negligent employers, says Citizens Advice

1 Tachwedd 2013

Employment tribunal awards could be collected cost-free through the tax system

Wronged employees face being left severely out of pocket in their pursuit of justice the charity Citizens Advice warns today, as the Government publishes damming new figures on employees not receiving tribunal payouts.

With the legal and enforcement cost of taking an employer to court reaching up to £1260 per case, employees could see themselves worse off as a result of taking their employer to court.

Previous analysis from Citizens Advice found a staggering 49 per cent of employees – 9,419 individuals – who win cases against their employers at tribunals don't receive compensation without paying more to enforce their award.  The charity estimates that of those over half (7,500 individuals) may never receive their money at all.

Citizens Advice is warning that without effective enforcement action, the new £1200 cost of taking legal action could deter thousands of exploited workers from challenging unfair dismissals, unpaid wages and discrimination.

The national charity is calling on the Government to replace the current Acas and ET Fast Track enforcement scheme – for which employees are charged a further £60 – with a system for collection of awards by HMRC. HMRC would collect awards at cost, making it more expensive for employers to avoid payments and making sure that no extra burden is placed on the taxpayer.

Enforcing employment tribunal payouts through the tax system would be a cost-effective and straightforward way for the Government to show it is serious about cracking down on exploitative businesses, argues Citizens Advice.

Gillian Guy, Chief Executive of Citizens Advice said:

“It’s impossible to justify fees of £1200 if employment tribunals fail to deliver results.  Government needs to show that it is tough on exploitative bosses.  At a time when jobs with zero-hours contracts are on the rise, it’s all too easy for bad employers to get away with treating their staff poorly.

“Over four million people have sought help with employment issues through Citizens Advice this year.  They need to be reassured that the British justice system will not only help them to win the moral victory, but the financial compensation they deserve as well.”

Citizens Advice has seen evidence of company directors avoiding liability by hiding assets, or by transferring them to a new ‘phoenix’ company and closing the one the tribunal ruled against. Many of the 850 people CABs advise on enforcement of awards do not have the spare money to pay high fees without the reassurance that they will recoup the cost through compensation.

Fees of up to £1200 for legal proceedings around employment tribunals were introduced in July 2013.

Notes to editors

  1. The estimated 7,500 individuals who may never see any compensation is based on a detailed analysis of MoJ statistics from 2011/12 on jurisdiction judgements and the BIS’s own research into levels of enforcement (50 per cent).
  2. Case studies are available.
  3. Ministry of Justice does not collate figures on the total number of monetary awards made by employment tribunals so this figure is estimated on the basis of the number of successful judgments and an estimated percentage of cases in which a monetary award is made.
  4. The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
  5. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  6. To find your local bureau in England and Wales, visit www.citizensadvice.org.uk. You can also get advice online at www.adviceguide.org.uk
  7. You can get consumer advice from the Citizens Advice consumer service on 08454 04 05 06 or 08454 04 05 05 for Welsh language speakers
  8. Citizens Advice Bureaux in England and Wales advised 2.1 million clients on 6.6 million problems from April 2012 to March 2013. For full 2012/2013 service statistics see our quarterly publication Advice trends
  9. Citizens Advice service staff are supported by more than 22,000 trained volunteers, working at over 3,000 service outlets across England and Wales.