Legal

Enforcing employment tribunal awards against dishonest employers

11 Jul 2018 By Lynne Marr

What can be done when employers deliberately avoid paying employment tribunal awards? Lynne Marr reports following a recent court ruling

In July 2017, the highly anticipated Review of Modern Working Practices (the Taylor Review) was published. Best known for throwing a spotlight on the rise of the gig economy and its implications for workers and employment rights, the review also considered other working practices, including the recovery of employment tribunal awards by successful claimants.

Unfortunately, even if successful, a large number of claimants never receive the compensation awarded from their employer. Most recent government data suggests that 46 per cent of successful Scottish claimants received none of their award and 13 per cent have received only part of it. 

One of the Taylor Review’s recommendations was to simplify the process for enforcing employment tribunal awards and another proposes setting up a ‘naming and shaming’ scheme for employers who do not pay employment tribunal awards within a reasonable period.

While laudable, these measures will not help claimants faced with employers who deliberately move assets and money away from the employing entity to avoid paying hefty employment tribunal awards. This was exactly the issue faced by the claimant in one recent Scottish Court of Session case (AA v Secretary of State for Business, Energy and Industrial Strategy)

The claimant was awarded £75,000 following findings against her employer of discriminatory harassment. After the judgment was issued but before the award was due, information was received by the claimant suggesting that the former employer intended to close its business and move its money to another entity with a view to avoiding the tribunal award. Attempts were made to stop this from happening but the former employer’s bank account balance fell to £4,000 and the harassed employee received nothing.

Aggrieved at the ineffectiveness of the tribunal judgment, the employee sought to argue before the Court of Session in Scotland that the Department for Business Energy and Industrial Strategy had failed in its legal obligation to ensure that she had an effective means for enforcing her rights under European Community law not to be discriminated against, and to obtain an effective remedy where those rights were breached. 

She argued that this could be achieved by allowing employees to apply to the employment tribunal at the outset of proceedings for an order that the employer’s assets be arrested pending the outcome of the tribunal proceedings as security for any subsequent tribunal award. In the event of success, this would ensure that the claimant had access to the sums awarded by the tribunal. Unfortunately, this is not currently something a claimant can do – an employment tribunal does not have the power to make such an order.

However, the Sheriff Court in Scotland does have this power. 

The Court of Session found that although claimants making complaints about discrimination in employment can only bring them in the employment tribunal, there is nothing to stop them from separately applying to the Sheriff Court for a protective order called an ‘arrestment on the dependence’. If granted, such an order would effectively preserve the employer’s assets until the outcome of the employment tribunal claim is known and with a view to satisfying any award made where a claim is upheld.

With such a remedy technically available, the court found that there was no breach of the UK Government’s obligation to ensure that there is an effective remedy for a claim to an employment tribunal. 

It remains to be seen whether this will prompt a rush of applications by employment tribunal claimants to the Sheriff Court for orders for arrestment on the dependence. Given the additional costs, procedural hurdles and inconvenience of doing this, it seems unlikely other than perhaps in higher value cases. So it seems it’s back to the drawing board for a solution.

Lynne Marr is a partner and employment law specialist at Brodies

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