November 29 2022

Penalty kick

Penalty kick

A question mark now hangs over implementation of just about the only new legal provision with the explicit aim of tackling deliberately exploitative employers to have been introduced by Coalition ministers since 2010.

Section 16 of the Enterprise & Regulatory Reform Act, which received its Royal Assent on 25 April, provides employment judges with a new, discretionary power to impose a financial penalty of up to £5,000 – in addition to a monetary award – on any respondent employer whose ‘breaches [of employment law] have aggravating features, such as malice or negligence’. As recently as March, the Department for Business, Innovation & Skills (BIS) indicated that this new power would come into force in “Spring 2014”.

Some of us considered that date a tad disappointing, given that most of the other employment-related provisions of the ERR Act, as well as other new measures not in the Act (such as employment tribunal fees, and new Rules of Procedure), were slated to come into force in either the Summer or the Autumn of 2013. It’s not as if section 16 is a terribly complicated provision, so why the delay in implementation?

But this week BIS published a revised timetable (PDF) for commencement (i.e. implementation) of each provision in the ERR Act, and it seems there is now no date set for implementation of section 16. Whilst the timetable gives commencement dates as far ahead as ‘2015/16’ for other provisions, in respect of section 16 it states that ‘plans for commencement will be announced once detailed implementation has been developed’. But a bit further on it baldy states that there are ‘no current plans to use’ the provision.

Once detailed implementation has been developed? What ‘detailed implementation’ is there to develop? Employment judges get the power, the President issues them some basic guidance on when to use the power, and away they go. It’s as simple as that, surely?

Not only would it be a simple measure to implement but – according to the final impact assessment published by BIS in November 2011 – section 16 could net HM Treasury some £2.8 million per year in penalties. Which wouldn’t end the age of austerity overnight, obviously, but you’d think Ministers would nevertheless want to get their hands on that money sooner rather than later. As my least favourite retailer (almost) says, every £2.8 million counts.

So why the lack of any ‘current plans’ to implement section 16? Well, it could be that Ministers realised, somewhat belatedly, that the kind of employer at which the provision is aimed is also the most likely to be unable or unwilling to pay any penalty. We know that some 50% of all employment tribunal awards go unpaid, and it seems likely that many section 16 penalties would too, unless there is an effective means of enforcement. And that requires a bit of ‘joined-up government’, something the Coalition isn’t terribly good at.

The good news is that this presents Labour with an opportunity: a cost-free policy commitment to implement section 16 financial penalties, enforced by HMRC’s ‘golden circle’ of effective and well-behaved debt collection agencies, who could also be tasked with enforcing unpaid ET awards (as I proposed in my ‘utterly brilliant’ six-point plan for the next Labour Business Secretary).

Come on Ed and Chuka, it’s an open goal!