My company can’t pay unfair dismissal fines

My company can’t pay unfair dismissal fines

Getting fined for unfair dismissal is possible if an Employment Tribunal decides someone was sacked unfairly.

UK employment law outlines the reasons for a fair or unfair dismissal. If you let go of an employee, you need to prove at least one fair reason listed in the Employment Rights Act 1996. If not, the dismissal might be seen as unfair and against the law.

There are some automatic unfair dismissal reasons, like pregnancy/maternity, trade union membership, and taking part in legal industrial action.

What are unfair dismissal fines?

You might get fined for unfair dismissal if an Employment Tribunal decides someone was unfairly sacked. The compensation usually has two parts:

•  A basic award, which depends on how long the employee worked, their age, and weekly wage. The most you might have to pay is £15,750.
• A compensatory award can cover things like lost wages or pension, and it’s based on what the Tribunal thinks is fair in each case. The highest basic award (since April 2019) is £86,444.

Facing an Employment Tribunal for unfair dismissal is worrying. But what if your business can’t afford to pay the fine for unfairly sacking an employee?

What happens if I can’t pay fines for unfair dismissal?

If you can’t pay the fines for unfair dismissal, your ex-employee can ask the local county court or the High Court to send bailiffs to collect the money. They might also send a Penalty Enforcement Notice to the Department for Business, Energy and Industrial Strategy (BEIS).

The department then sends a warning saying you have 28 days to pay. If you don’t pay by then, you might get an extra penalty of up to 50% of the original fine. There’s also a risk that the government could publicly name your business for not paying.

Naming Scheme for unpaid Employment Tribunal awards

The ‘naming scheme’ started on 18th December 2018 after the Taylor Review of Modern Working Practices. If the decision against you was made on or after this date and includes compensation of £200 or more, you might be included and named.

Employers get named through a press release from the Department for Business, Energy and Industrial Strategy. You’d get a letter telling you that your business will be in the next release.

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How can I pay my unfair dismissal fines?

If you can’t pay your Employment Tribunal fines, there could be a few solutions. It’s a good idea to get advice from a licensed insolvency practitioner (IP) to figure out your best options. Depending on your situation, these might include the following.

I. Additional finance:

The fines for unfair dismissal can be quite big, and you might need a chunk of cash to pay them all at once. If you own valuable things like equipment or vehicles, you could get an asset-based loan instead of a ‘normal’ bank loan. 

This means you sell those assets and then rent them back. You get a lump sum of cash to pay the unfair dismissal fines, but you still get to use the assets.

You could also try appealing the Employment Tribunal decision. Vanguard Insolvency knows a lot about helping businesses with debts and can give you advice if you can’t pay the unfair dismissal fines. We have offices all over the UK and offer free consultations on the same day to figure out your best choices.