Negotiating the Minefield of Unpaid Awards by Employment Tribunals

The Scotsman, June 18, 2018 | Go to article overview

Negotiating the Minefield of Unpaid Awards by Employment Tribunals


A new ruling could put small firms at financial risk, says Robert Phillips T he most recent study of awards from employment tribunals stated that 46 per cent go unpaid in Scotland. That statistic might start to change after a significant new ruling - but that same ruling could also put many small businesses at financial risk.

In the case of AA v BEIS [the UK government's Department for Business, Energy &Industrial Strategy], a complaint was made by AA, whose tribunal award of £75,000 plus interest was worthless, because, AA argued, there were no mechanisms to protect prospective tribunal awards.

In an opinion which will surprise many advisers of employees the judge held that there is a way for employees in Scotland to seek interim protection on any prospective tribunal award and this interim protection is not so complex that EU rights could not be enforced effectively.

To do so when an employee starts proceedings in the Employment Tribunal, they would also need to commence proceedings in the sheriff court. At the start of court proceedings (although it can be sought at any time), the employee would need to seek what is known as a 'warrant to arrest on the dependence'. This is a court order which allows the employee to arrest sums held in the employer's bank account or by the employer's creditor as security in the event of an award from the Employment Tribunal. The court proceedings would then be frozen until the tribunal proceedings are concluded.

It is not hard to think of the serious difficulties that could be caused to cash flow within many small or strug-gling businesses if funds are arrested pending the outcome of an employment tribunal. Add to that the reputational damage by a sheriff accepting that there was a real and substantial risk of insolvency or the business concealing assets to defeat a judgment, then this has the potential to be a very damaging course of action. …

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