Logo
Volunteers and tax requirements
Advantages and disadvantages of taking on volunteers
The business benefits and risks of taking on voluntary workers.
Many not-for-profit organisations benefit from taking on volunteers, eg to serve on committees, raise funds, create websites or databases, and deliver mailshots. Other businesses may offer work experience or secondment opportunities to help build links with local communities or within their industry or to help attract potential recruits.
Business benefits of using volunteers
Volunteers can offer several advantages to businesses, including:
- Saving money and resources.
- Engaging with a more diverse range of skills, experience, and knowledge.
- Raising awareness of your brand and what your business does.
- Building relationships within your local community. Providing volunteering opportunities provides opportunities for social inclusion, skills development, and potential routes to employment.
- Giving you a different perspective on challenges or opportunities for your business as volunteers express their opinions or ideas.
- Building stronger teams and improving staff morale.
Taking on volunteers - business considerations
Before taking on a volunteer you should consider:
- Whether your organisation has a suitable vacancy for a volunteer.
- The need for inductions and, possibly, task-specific training. See preparing for an induction.
- What workspace the volunteer will need. Try to minimise disruption and demands on paid staff.
- In the absence of pay/benefits, the need to make them feel recognised, involved, and appreciated.
- Their need to work flexibly. Think about the needs of paid staff and whether you can adopt across-the-board flexibility.
- The fact that, as an employer, you have a similar duty of care on health and safety issues to volunteers as to employees - see volunteers and health and safety.
Volunteers will need managing. Therefore, you could give a paid member of staff responsibility for co-ordinating volunteers and their training and supervision. This will help avoid friction between volunteers and paid workers.
You should consult volunteers on the level of involvement they would like, eg in meetings or discussion groups.
AccessNI checks
You do not have to get an AccessNI check for volunteers unless they are working with children or vulnerable adults in a 'regulated' or care position such as a care home or a school, or in an occupation/position covered by the Rehabilitation of Offenders (Exceptions) Order (NI) 1979 and the Rehabilitation of Offenders (Exceptions) (Amendment) Order (Northern Ireland) 2019.
For more information, see AccessNI criminal records checks.
Northern Ireland Council for Voluntary Action (NICVA) employer guidance on the voluntary sector.
Developed withActionsAlso on this siteContent category
Source URL
/content/advantages-and-disadvantages-taking-volunteers
Links
What volunteers are entitled to
How to avoid creating a situation where a volunteer might consider themselves a worker or employee.
Individuals who are genuinely volunteers have no employment rights but may still be able to claim state benefits and/or allowances.
Volunteer agreements
There have been cases where volunteers have succeeded in claiming to be a worker or even an employee. It is important to be aware of this because workers benefit from certain statutory employment rights, eg the right to receive the national minimum wage, while employees benefit from the full range of such rights including unlawful discrimination.
Therefore, when you take on a volunteer, any agreement you have with them must be worded so that the volunteer is clear that it is not a contract of employment, eg the agreement must not suggest that you and the volunteer have any obligations towards each other or that it is a contract for services.
Instead, you should:
- Give the individual a volunteer agreement and role description in writing.
- Not promise anything in return for the volunteer's work.
Volunteer expenses
However, as part of the agreement, you may:
- Give a volunteer relevant training.
- Give relevant supervision.
- Reimburse actual expenses a volunteer incurs when volunteering, eg travel, food, drink, or any equipment needed. You may also consider covering out-of-pocket expenses eg phone calls, stationery, or postage necessary for a volunteer to work.
Note that you should never give a volunteer a gift or reward other than in an isolated case.
There are statutory rates of mileage reimbursements that can be paid if you have used your own car for volunteering and/or carrying passengers. Provided there is no profit element (ie no excess is paid), they are not subject to tax or National Insurance Contributions.
See expenses and allowance for volunteers.
Volunteers and the National Minimum Wage (NMW)
For the purposes of the NMW legislation, volunteers are not workers and are therefore not entitled to be paid the NMW.
However, you must ensure that the individual is genuinely a volunteer, ie that it's not possible for them to claim they are - in fact - a worker.
Voluntary workers are a category of worker specifically exempt from being entitled to the NMW. See who should be paid the minimum wage.
State benefits and allowances available to volunteers
Volunteers may continue to be eligible for benefits and allowances such as Universal Credit or Personal Independence Payment (PIP). See volunteering while on benefits.
Those receiving Universal Credit will need to attend meetings at their Jobs and Benefits office, and your organisation will need to accommodate these visits.
Find your nearest Jobs and Benefits Office.
You have no duty to inform the benefits office who is volunteering - this is for the individual volunteer to decide.
Developed withAlso on this siteContent category
Source URL
/content/what-volunteers-are-entitled
Links
Volunteers and health and safety
Understand your workplace health and safety obligations for volunteers.
Organisations staffed entirely by volunteers aren't required to carry out a risk assessment. It is good practice to treat volunteers with the same consideration for health and safety as you would treat paid staff.
You legal requirements
The legal obligations for the health and safety of volunteers are:
- a general duty of care to avoid causing injury
- a duty to ensure that people not in your employment, and who may be affected by your operations, are not exposed to health and safety risks
Developed withHelpAlso on this siteContent category
Source URL
/content/volunteers-and-health-and-safety
Links
Taking on young volunteers
It's common for businesses to use young volunteers for part-time volunteering or for volunteering during school holidays.
It's common for businesses to use young volunteers for part-time volunteering or for volunteering during school holidays.
There are no specific restrictions on volunteering by young people in not-for-profit organisations. However, you should follow the working-time rules that apply to regular employees.
You should ensure that young people are afforded protection. See Volunteer Now's guidance on safeguarding.
Volunteers and voluntary workers are not entitled to the National Minimum Wage - see who should be paid the minimum wage.
Insurance for young people
If you use volunteers who are under 16 years old, you must ensure that your employer's liability and public liability insurance policies cover young workers and volunteers under 16 years old.
Developed withAlso on this siteContent category
Source URL
/content/taking-young-volunteers
Links
Volunteers and tax requirements
You may ask for an exemption from HM Revenue & Customs (HMRC) not to report expenses or benefits that are not taxable.
You may ask for an exemption from HM Revenue & Customs (HMRC) not to report expenses or benefits that are not taxable - this would include expenses paid to volunteers for carrying out volunteering for your business.
You do not have to report certain business expenses and benefits like:
- business travel
- phone bills
- business entertainment expenses
- uniform and tools for work
You do not need to apply for an exemption if you’re paying HMRC’s benchmark rates for allowable expenses.
The exemption also means that the expenses or benefits do not count as earnings for NIC purposes.
For further details see expenses and benefits for employers.
Developed withAlso on this siteContent category
Source URL
/content/volunteers-and-tax-requirements
Links
Volunteers and health and safety
Advantages and disadvantages of taking on volunteers
The business benefits and risks of taking on voluntary workers.
Many not-for-profit organisations benefit from taking on volunteers, eg to serve on committees, raise funds, create websites or databases, and deliver mailshots. Other businesses may offer work experience or secondment opportunities to help build links with local communities or within their industry or to help attract potential recruits.
Business benefits of using volunteers
Volunteers can offer several advantages to businesses, including:
- Saving money and resources.
- Engaging with a more diverse range of skills, experience, and knowledge.
- Raising awareness of your brand and what your business does.
- Building relationships within your local community. Providing volunteering opportunities provides opportunities for social inclusion, skills development, and potential routes to employment.
- Giving you a different perspective on challenges or opportunities for your business as volunteers express their opinions or ideas.
- Building stronger teams and improving staff morale.
Taking on volunteers - business considerations
Before taking on a volunteer you should consider:
- Whether your organisation has a suitable vacancy for a volunteer.
- The need for inductions and, possibly, task-specific training. See preparing for an induction.
- What workspace the volunteer will need. Try to minimise disruption and demands on paid staff.
- In the absence of pay/benefits, the need to make them feel recognised, involved, and appreciated.
- Their need to work flexibly. Think about the needs of paid staff and whether you can adopt across-the-board flexibility.
- The fact that, as an employer, you have a similar duty of care on health and safety issues to volunteers as to employees - see volunteers and health and safety.
Volunteers will need managing. Therefore, you could give a paid member of staff responsibility for co-ordinating volunteers and their training and supervision. This will help avoid friction between volunteers and paid workers.
You should consult volunteers on the level of involvement they would like, eg in meetings or discussion groups.
AccessNI checks
You do not have to get an AccessNI check for volunteers unless they are working with children or vulnerable adults in a 'regulated' or care position such as a care home or a school, or in an occupation/position covered by the Rehabilitation of Offenders (Exceptions) Order (NI) 1979 and the Rehabilitation of Offenders (Exceptions) (Amendment) Order (Northern Ireland) 2019.
For more information, see AccessNI criminal records checks.
Northern Ireland Council for Voluntary Action (NICVA) employer guidance on the voluntary sector.
Developed withActionsAlso on this siteContent category
Source URL
/content/advantages-and-disadvantages-taking-volunteers
Links
What volunteers are entitled to
How to avoid creating a situation where a volunteer might consider themselves a worker or employee.
Individuals who are genuinely volunteers have no employment rights but may still be able to claim state benefits and/or allowances.
Volunteer agreements
There have been cases where volunteers have succeeded in claiming to be a worker or even an employee. It is important to be aware of this because workers benefit from certain statutory employment rights, eg the right to receive the national minimum wage, while employees benefit from the full range of such rights including unlawful discrimination.
Therefore, when you take on a volunteer, any agreement you have with them must be worded so that the volunteer is clear that it is not a contract of employment, eg the agreement must not suggest that you and the volunteer have any obligations towards each other or that it is a contract for services.
Instead, you should:
- Give the individual a volunteer agreement and role description in writing.
- Not promise anything in return for the volunteer's work.
Volunteer expenses
However, as part of the agreement, you may:
- Give a volunteer relevant training.
- Give relevant supervision.
- Reimburse actual expenses a volunteer incurs when volunteering, eg travel, food, drink, or any equipment needed. You may also consider covering out-of-pocket expenses eg phone calls, stationery, or postage necessary for a volunteer to work.
Note that you should never give a volunteer a gift or reward other than in an isolated case.
There are statutory rates of mileage reimbursements that can be paid if you have used your own car for volunteering and/or carrying passengers. Provided there is no profit element (ie no excess is paid), they are not subject to tax or National Insurance Contributions.
See expenses and allowance for volunteers.
Volunteers and the National Minimum Wage (NMW)
For the purposes of the NMW legislation, volunteers are not workers and are therefore not entitled to be paid the NMW.
However, you must ensure that the individual is genuinely a volunteer, ie that it's not possible for them to claim they are - in fact - a worker.
Voluntary workers are a category of worker specifically exempt from being entitled to the NMW. See who should be paid the minimum wage.
State benefits and allowances available to volunteers
Volunteers may continue to be eligible for benefits and allowances such as Universal Credit or Personal Independence Payment (PIP). See volunteering while on benefits.
Those receiving Universal Credit will need to attend meetings at their Jobs and Benefits office, and your organisation will need to accommodate these visits.
Find your nearest Jobs and Benefits Office.
You have no duty to inform the benefits office who is volunteering - this is for the individual volunteer to decide.
Developed withAlso on this siteContent category
Source URL
/content/what-volunteers-are-entitled
Links
Volunteers and health and safety
Understand your workplace health and safety obligations for volunteers.
Organisations staffed entirely by volunteers aren't required to carry out a risk assessment. It is good practice to treat volunteers with the same consideration for health and safety as you would treat paid staff.
You legal requirements
The legal obligations for the health and safety of volunteers are:
- a general duty of care to avoid causing injury
- a duty to ensure that people not in your employment, and who may be affected by your operations, are not exposed to health and safety risks
Developed withHelpAlso on this siteContent category
Source URL
/content/volunteers-and-health-and-safety
Links
Taking on young volunteers
It's common for businesses to use young volunteers for part-time volunteering or for volunteering during school holidays.
It's common for businesses to use young volunteers for part-time volunteering or for volunteering during school holidays.
There are no specific restrictions on volunteering by young people in not-for-profit organisations. However, you should follow the working-time rules that apply to regular employees.
You should ensure that young people are afforded protection. See Volunteer Now's guidance on safeguarding.
Volunteers and voluntary workers are not entitled to the National Minimum Wage - see who should be paid the minimum wage.
Insurance for young people
If you use volunteers who are under 16 years old, you must ensure that your employer's liability and public liability insurance policies cover young workers and volunteers under 16 years old.
Developed withAlso on this siteContent category
Source URL
/content/taking-young-volunteers
Links
Volunteers and tax requirements
You may ask for an exemption from HM Revenue & Customs (HMRC) not to report expenses or benefits that are not taxable.
You may ask for an exemption from HM Revenue & Customs (HMRC) not to report expenses or benefits that are not taxable - this would include expenses paid to volunteers for carrying out volunteering for your business.
You do not have to report certain business expenses and benefits like:
- business travel
- phone bills
- business entertainment expenses
- uniform and tools for work
You do not need to apply for an exemption if you’re paying HMRC’s benchmark rates for allowable expenses.
The exemption also means that the expenses or benefits do not count as earnings for NIC purposes.
For further details see expenses and benefits for employers.
Developed withAlso on this siteContent category
Source URL
/content/volunteers-and-tax-requirements
Links
Taking on young volunteers
Advantages and disadvantages of taking on volunteers
The business benefits and risks of taking on voluntary workers.
Many not-for-profit organisations benefit from taking on volunteers, eg to serve on committees, raise funds, create websites or databases, and deliver mailshots. Other businesses may offer work experience or secondment opportunities to help build links with local communities or within their industry or to help attract potential recruits.
Business benefits of using volunteers
Volunteers can offer several advantages to businesses, including:
- Saving money and resources.
- Engaging with a more diverse range of skills, experience, and knowledge.
- Raising awareness of your brand and what your business does.
- Building relationships within your local community. Providing volunteering opportunities provides opportunities for social inclusion, skills development, and potential routes to employment.
- Giving you a different perspective on challenges or opportunities for your business as volunteers express their opinions or ideas.
- Building stronger teams and improving staff morale.
Taking on volunteers - business considerations
Before taking on a volunteer you should consider:
- Whether your organisation has a suitable vacancy for a volunteer.
- The need for inductions and, possibly, task-specific training. See preparing for an induction.
- What workspace the volunteer will need. Try to minimise disruption and demands on paid staff.
- In the absence of pay/benefits, the need to make them feel recognised, involved, and appreciated.
- Their need to work flexibly. Think about the needs of paid staff and whether you can adopt across-the-board flexibility.
- The fact that, as an employer, you have a similar duty of care on health and safety issues to volunteers as to employees - see volunteers and health and safety.
Volunteers will need managing. Therefore, you could give a paid member of staff responsibility for co-ordinating volunteers and their training and supervision. This will help avoid friction between volunteers and paid workers.
You should consult volunteers on the level of involvement they would like, eg in meetings or discussion groups.
AccessNI checks
You do not have to get an AccessNI check for volunteers unless they are working with children or vulnerable adults in a 'regulated' or care position such as a care home or a school, or in an occupation/position covered by the Rehabilitation of Offenders (Exceptions) Order (NI) 1979 and the Rehabilitation of Offenders (Exceptions) (Amendment) Order (Northern Ireland) 2019.
For more information, see AccessNI criminal records checks.
Northern Ireland Council for Voluntary Action (NICVA) employer guidance on the voluntary sector.
Developed withActionsAlso on this siteContent category
Source URL
/content/advantages-and-disadvantages-taking-volunteers
Links
What volunteers are entitled to
How to avoid creating a situation where a volunteer might consider themselves a worker or employee.
Individuals who are genuinely volunteers have no employment rights but may still be able to claim state benefits and/or allowances.
Volunteer agreements
There have been cases where volunteers have succeeded in claiming to be a worker or even an employee. It is important to be aware of this because workers benefit from certain statutory employment rights, eg the right to receive the national minimum wage, while employees benefit from the full range of such rights including unlawful discrimination.
Therefore, when you take on a volunteer, any agreement you have with them must be worded so that the volunteer is clear that it is not a contract of employment, eg the agreement must not suggest that you and the volunteer have any obligations towards each other or that it is a contract for services.
Instead, you should:
- Give the individual a volunteer agreement and role description in writing.
- Not promise anything in return for the volunteer's work.
Volunteer expenses
However, as part of the agreement, you may:
- Give a volunteer relevant training.
- Give relevant supervision.
- Reimburse actual expenses a volunteer incurs when volunteering, eg travel, food, drink, or any equipment needed. You may also consider covering out-of-pocket expenses eg phone calls, stationery, or postage necessary for a volunteer to work.
Note that you should never give a volunteer a gift or reward other than in an isolated case.
There are statutory rates of mileage reimbursements that can be paid if you have used your own car for volunteering and/or carrying passengers. Provided there is no profit element (ie no excess is paid), they are not subject to tax or National Insurance Contributions.
See expenses and allowance for volunteers.
Volunteers and the National Minimum Wage (NMW)
For the purposes of the NMW legislation, volunteers are not workers and are therefore not entitled to be paid the NMW.
However, you must ensure that the individual is genuinely a volunteer, ie that it's not possible for them to claim they are - in fact - a worker.
Voluntary workers are a category of worker specifically exempt from being entitled to the NMW. See who should be paid the minimum wage.
State benefits and allowances available to volunteers
Volunteers may continue to be eligible for benefits and allowances such as Universal Credit or Personal Independence Payment (PIP). See volunteering while on benefits.
Those receiving Universal Credit will need to attend meetings at their Jobs and Benefits office, and your organisation will need to accommodate these visits.
Find your nearest Jobs and Benefits Office.
You have no duty to inform the benefits office who is volunteering - this is for the individual volunteer to decide.
Developed withAlso on this siteContent category
Source URL
/content/what-volunteers-are-entitled
Links
Volunteers and health and safety
Understand your workplace health and safety obligations for volunteers.
Organisations staffed entirely by volunteers aren't required to carry out a risk assessment. It is good practice to treat volunteers with the same consideration for health and safety as you would treat paid staff.
You legal requirements
The legal obligations for the health and safety of volunteers are:
- a general duty of care to avoid causing injury
- a duty to ensure that people not in your employment, and who may be affected by your operations, are not exposed to health and safety risks
Developed withHelpAlso on this siteContent category
Source URL
/content/volunteers-and-health-and-safety
Links
Taking on young volunteers
It's common for businesses to use young volunteers for part-time volunteering or for volunteering during school holidays.
It's common for businesses to use young volunteers for part-time volunteering or for volunteering during school holidays.
There are no specific restrictions on volunteering by young people in not-for-profit organisations. However, you should follow the working-time rules that apply to regular employees.
You should ensure that young people are afforded protection. See Volunteer Now's guidance on safeguarding.
Volunteers and voluntary workers are not entitled to the National Minimum Wage - see who should be paid the minimum wage.
Insurance for young people
If you use volunteers who are under 16 years old, you must ensure that your employer's liability and public liability insurance policies cover young workers and volunteers under 16 years old.
Developed withAlso on this siteContent category
Source URL
/content/taking-young-volunteers
Links
Volunteers and tax requirements
You may ask for an exemption from HM Revenue & Customs (HMRC) not to report expenses or benefits that are not taxable.
You may ask for an exemption from HM Revenue & Customs (HMRC) not to report expenses or benefits that are not taxable - this would include expenses paid to volunteers for carrying out volunteering for your business.
You do not have to report certain business expenses and benefits like:
- business travel
- phone bills
- business entertainment expenses
- uniform and tools for work
You do not need to apply for an exemption if you’re paying HMRC’s benchmark rates for allowable expenses.
The exemption also means that the expenses or benefits do not count as earnings for NIC purposes.
For further details see expenses and benefits for employers.
Developed withAlso on this siteContent category
Source URL
/content/volunteers-and-tax-requirements
Links
Your responsibilities to employees transferred into your business
In this guide:
- Responsibilities to employees if you buy or sell a business
- TUPE legislation in Northern Ireland
- Your responsibilities to employees transferred into your business
- What is meant by a TUPE transfer
- The transfer of employee liability information
- Your responsibilities to employees transferred out of your business
- Changing terms and conditions after a business transfer
- Dismissal before or after a business transfer
- Informing and consulting employees about business transfers
- Transfers of insolvent businesses
- TUPE transfers: the impact on employee relations
TUPE legislation in Northern Ireland
Employer guidance on TUPE legislation in Northern Ireland.
On 6 April 2006, the revised Transfer of Undertakings (Protection of Employment) Regulations 2006 (the "2006 Regulations") (S.I. 2006/246) and the Service Provision Change (Protection of Employment) Regulations (Northern Ireland) 2006 (the "SPC Regulations") (S.R. 2006 No. 177) came into operation.
Northern Ireland TUPE legislation
The legislation.gov.uk website presents the legislation in detail:
- Transfer of Undertakings (Protection of Employment) Regulations 2006
- Service Provision Change (Protection of Employment) Regulations (Northern Ireland) 2006
The 2006 Regulations made UK-wide provision for the treatment of employees, and related matters, on the transfer of a business or undertaking, so that when all or part of a business is bought or sold, the terms and conditions of the employees who transfer in the sale may be preserved.
The 2006 Regulations also implemented certain service provision change elements, but within those regulations, these elements apply in Great Britain only. Separate regulations, namely the SPC Regulations, were required for Northern Ireland, as Great Britain did not have the necessary powers to legislate on this matter for Northern Ireland.
Developed withAlso on this siteContent category
Source URL
/content/tupe-legislation-northern-ireland
Links
Your responsibilities to employees transferred into your business
You take over certain responsibilities when an employee is transferred into your business.
Employees who transfer to your employment do so on their pre-existing terms and conditions and with their continuous employment preserved. This also applies to employees who have already transferred on a previous transfer.
You also take over responsibility/liability for any:
- outstanding disciplinary and grievance situations
- ongoing industrial tribunal claims
- any potential legal actions which may be brought
- collective agreements in force at the time of the transfer, which means that you must continue to recognise the recognised trade union(s) that the staff transferring are members of
Occupational pension and share-option schemes
You do not have to offer transferred employees who are members of - or eligible to join - an occupational pension scheme (OPS) exactly the same pension rights.
However, you must still offer those employees a minimum level of occupational pension provision.
You can opt to provide access to an OPS or make employer contributions to a stakeholder pension scheme. If you choose a stakeholder or a defined contribution scheme, you will have to match the employee's contributions up to 6%. This can be increased if both parties agree.
All employers have to provide their employees with a workplace pension scheme. To read more about these obligations, see automatic enrolment into a workplace pension.
If you don't take over the previous business' shares, you won't be able to provide such shares to your staff. If the previous employer had share or share-option schemes, you must provide equivalent schemes.
Note that if you buy a privatised (previously public sector) undertaking, or win a contract to provide a service to a central or local government organisation, the government expects you to have pension arrangements that are broadly comparable with that enjoyed by the previously public-sector employees.
Changes to terms and conditions
Don't change transferred employees' terms and conditions if the reason for the change is either the transfer itself, eg to match those of your existing staff, or reasons connected to the transfer.
If you change an employee's terms and conditions in this way, this could amount to a breach of contract. The employee may then be able to resign and claim constructive dismissal.
If, however, the change is unconnected with the transfer, you should handle it like any other change of contract where there is provision for change in the contract or where change has been brought about by mutual agreement. For more information, see changing terms and conditions after a transfer and how to change an employee's terms of employment.
Labour Relations Agency (LRA) advice on agreeing and changing contracts of employment.
Information and consultation
Even if you are taking on transferred employees, you must still inform and consult representatives of your existing employees who may be affected by the transfer.
In addition, you must give details to the previous employer of any action, step, or arrangement you intend to take that will affect the transferring employees. There are no set timescales, however, you must do this before the transfer takes place with adequate time for consultation.
See informing and consulting employees about business transfers.
Developed withAlso on this siteContent category
Source URL
/content/your-responsibilities-employees-transferred-your-business
Links
What is meant by a TUPE transfer
What is and what is not included as a transfer for the purposes of TUPE.
A 'relevant transfer', ie a transfer to which the Transfer of Undertakings (Protection of Employment) Regulations 2006 and/or the Service Provision Change (Protection of Employment) Regulations (Northern Ireland) 2006 (known collectively as TUPE) apply - occurs when:
- An economic entity is one which is stable and is transferred from one business (part or undertaking) to another, ie the entity is sold as a going concern and retains its identity after the transfer. This is known as a business transfer (standard transfer).
- A client engages a contractor to do work on its behalf or reassigns such a contract, including bringing the work in-house - this is known as a service provision change (extended transfer).
An economic entity
An economic entity is defined as an organised grouping of resources, eg a grouping of employees and assets such as premises and computer equipment that has the objective of pursuing an economic activity. Some transfers will qualify as both a business transfer and as a service provision change, eg outsourcing a service will often meet both definitions.
Examples of business transfers
- Sale of the whole or part of a business where the business continues in a similar format.
- Merger of two businesses.
Service provision change
Examples of service provision changes are where:
- a business contracts its security arrangements to an outside security business (outsourcing)
- a business decides to hire its own staff to provide catering to replace an outside catering business (in-sourcing)
- the contract to clean a client's premises is transferred from one cleaning contractor to another
TUPE applies equally to relevant transfers of large and small businesses, and to public and private undertakings. This means there would be a relevant transfer if you sold your business or if your business bought and operated another business.
Note that TUPE generally applies to second and subsequent transfers of the same undertaking. This means that, if you sell a business or part of a business that you previously bought or relinquish a contract that you previously took over, the employees you took over will now transfer to the new employer - as per the Court of Justice of the European Union (CJEU) interpretation of TUPE.
When TUPE does not apply
Not all transfers are relevant transfers. TUPE does not apply when:
- A client buys services from a contractor on a one-off basis - rather than the two parties entering into an ongoing relationship for the provision of the service.
- There is a transfer of share takeover - when a company's shares are sold to new shareholders, there is no transfer of the business - the same company continues to be the employer.
- A business transfers assets only - then there is no transfer of a business as a going concern eg if the equipment is sold.
- There is a transfer of an undertaking situated outside the UK - although similar provisions apply in the European Union.
- There is a change in business identity - if the work or organisational structure changes radically.
Whether TUPE applies in any particular case depends on all relevant circumstances. In the event of a dispute, only an industrial tribunal or a higher court can decide this.
Where TUPE applies, existing employees of the undertaking transferred automatically become employees of the business that takes the undertaking over. It is unlikely that agency workers fall within the definition of 'employee' for the purposes of TUPE ie they do not automatically transfer, it seems, on current law.
If you think you may become involved in a transfer situation to which TUPE applies, you should consider obtaining legal advice, as the legislation in this area can be complex. Choose a solicitor for your business.
Developed withAlso on this siteContent category
Source URL
/content/what-meant-tupe-transfer
Links
The transfer of employee liability information
The information you must provide to the new employer when you transfer employees out of your business.
When you transfer employees from your business, you must provide certain information about the employees who are transferring to the new employer. This is known as employee liability information.
The aim of this information is to give the new employer time to understand their obligations towards the transferred employees.
You must provide all information in writing not less than 14 days before the relevant transfer. This can be as electronic files as long as the new employer can readily access the information.
If there is not much information to pass on, eg because only a few employees are transferring, you can provide the information by telephone. Consider asking the new employer which method they would prefer. It would be prudent to keep a full record of all such information, either way.
You can provide the information in stages. However, you must have given all the information before - ideally at least two weeks before - the completion of the transfer. You can also provide the information via a third party if you wish.
You cannot agree with the new employer not to supply this information.
If you do not provide employee liability information, the new employer can make a complaint to an industrial tribunal. This could lead to a compensatory award for any loss the new employer incurs due to not having the information. Compensation is usually at least £500 per employee affected.
The information you must provide
You must provide:
- identity and ages of the employees who will transfer
- their statements of employment particulars
- details of any collective agreements that apply
- details of any formal disciplinary action taken in the past two years to which the statutory disciplinary and dismissal procedures apply
- details of any employee grievances raised in the past two years to which the LRA Code of Practice on Disciplinary and Grievance Procedures applies
- instances of any legal actions against you in the past two years by the transferring employees and any potential legal actions that may be brought
If any of this information changes before the transfer is complete, you must provide the changes in writing to the new employer.
Developed withAlso on this siteContent category
Source URL
/content/transfer-employee-liability-information
Links
Your responsibilities to employees transferred out of your business
What you have to do if all or some of your employees transfer to another employer.
You have important responsibilities to your employees if they are transferred out of your business.
Who transfers?
Those who transfer are employees employed by the transferor and assigned to the organised grouping of resources that are going to be transferred.
Therefore those who cannot transfer are:
- those only temporarily assigned to the organised grouping
- the self-employed
- independent contractors
However, an employee can still transfer even if they don't spend all their time working for the grouping to be transferred.
Information and consultation
Under the Transfer of Undertakings (Protection of Employment) Regulations 2006 and/or the Service Provision Change (Protection of Employment) Regulations (Northern Ireland) 2006 (known collectively as TUPE), you are required to inform and consult the representatives of those employees affected by the transfer. Inform and consult your employees.
Affected employees are not just those who are going to transfer - other employees in the business may be affected by the transfer and have a right to be informed and consulted too.
See informing and consulting employees about business transfers.
Refusal to transfer
If an employee refuses to transfer with a business, they have not been dismissed but have effectively resigned. This means that they lose the right to claim certain employment rights.
See resignations connected with a business transfer.
Employee liability information
When employees transfer out of your business, you must give the new employer certain information about those employees. See the transfer of employee liability information.
Developed withAlso on this siteContent category
Source URL
/content/your-responsibilities-employees-transferred-out-your-business
Links
Changing terms and conditions after a business transfer
When you can change employees' terms and conditions of employment following a business transfer.
In a business transfer situation, employees' existing terms and conditions are transferred to the new employer from the start of the new employment.
Employees should therefore not be disadvantaged by a transfer, ie by having less favourable terms and conditions in their new roles.
Economic, technical or organisational reason
If you are the new employer, you can only vary a contract for a reason related to the transfer if it's an economic, technical, or organisational (ETO) reason entailing changes in the workforce.
There is no legal definition of an ETO reason. However, it might relate to, for example:
- the profitability or market performance of your business - an economic reason
- the nature of the equipment or production processes which you operate - a technical reason
- the management or organisational structure of your business - an organisational reason
Note that you can't vary the contracts of the transferred employees in order to harmonise their terms and conditions with those of your existing employees in equivalent roles or grades. A pay cut does not count as an ETO. The transfer of a business subject to insolvency proceedings is a different matter, however - it is covered below. However, you could change terms and conditions - by agreement - if the changes are positive, eg fewer working hours or additional holiday entitlement.
Changing terms and conditions over time
After a certain period, eg six months, you might be tempted to consider it 'safe' to vary the contracts of the transferred employees as the reason for the change cannot have been by reason of the transfer.
However, there is no set period for this and no 'rule of thumb' used by the courts or specified in the regulations to define a period of time after which it is safe to assume that the transfer will not impact directly or indirectly on the employer's actions.
Changing terms and conditions after the transfer of an insolvent business
Note that there is greater flexibility to change terms and conditions if the business being transferred is insolvent - see transfers of insolvent businesses.
Developed withAlso on this siteContent category
Source URL
/content/changing-terms-and-conditions-after-business-transfer
Links
Dismissal before or after a business transfer
Continuity of employment, dismissals, and the ETO defence for a business transfer.
Employees who transfer have their continuity of employment preserved. This means that those who had, for example, 18 months of service with their previous employer have - at the time of the transfer - 18 months' service with the new employer.
This is important as it means that employees with enough continuous employment maintain their right to claim certain employment protection rights, eg the right to claim unfair dismissal (one year's continuous employment). Employees also have the right to claim a statutory redundancy payment (two years). See continuous employment and employee rights.
Dismissals before the business transfer
An employee still transfers if they would have been employed in the undertaking immediately before the transfer had they not been unfairly dismissed - either because of the transfer or for a reason connected with the transfer.
The employee will be able to lodge a complaint at the Industrial Tribunal for unfair dismissal against either the previous or the new employer - as long as they have at least one year's continuous employment.
The Labour Relations Agency (LRA) provides an alternative to the Industrial Tribunal under the LRA Arbitration Scheme. Under the scheme claimants and respondents can choose to refer a claim to an arbitrator to decide instead of going to a tribunal. The arbitrator's decision is binding as a matter of law and has the same effect as a tribunal.
Employers do, however, have the 'ETO defence' - see below.
Dismissals after the business transfer
If you dismiss a transferred employee either because of the transfer or a reason connected with it, their dismissal is automatically unfair.
In certain circumstances, individuals may require at least one year's continuous employment.
The LRA Arbitration Scheme can again provide an alternative to the Industrial Tribunal.
Employers do, however, have the 'ETO defence' - see below.
The ETO defence
If there is an economic, technical or organisational (ETO) reason entailing changes in the workforce, a Transfer of Undertakings (Protection of Employment) Regulations 2006 and/or Service Provision Change (Protection of Employment) Regulations (Northern Ireland) 2006 (known collectively as TUPE)-related dismissal may be fair.
However, even with this defence, the dismissing employer must still follow a fair dismissal procedure. See dismissing employees.
ETO reasons are narrow in practice and effectively amount to a genuine redundancy situation, eg insolvency of the transferred undertaking.
Developed withAlso on this siteContent category
Source URL
/content/dismissal-or-after-business-transfer
Links
Informing and consulting employees about business transfers
Which workplace representatives you must consult and what you should tell them.
Under the Transfer of Undertakings (Protection of Employment) Regulations 2006 and the Service Provision Change (Protection of Employment) Regulations (Northern Ireland) 2006, (collectively known as TUPE), you are required to inform and consult the appropriate workplace representatives of those employees affected by the transfer.
Affected employees are not just those who are going to transfer - other employees in either business may be affected by the transfer and have a right to be informed and consulted too.
Which representatives must I inform and consult?
The appropriate representatives who you must inform and consult are either:
- Representatives of a trade union you have recognised for the purposes of collective bargaining - if there is one. See work effectively with trade unions.
- Employee representatives appointed by the affected employees specifically for the purpose of being informed and consulted on the transfer or who have already been appointed for a different purpose and are suitable for this purpose too. For information on arranging the election of employee representatives, see employee representatives during business transfers.
If you have a pre-existing information and consultation (I&C) agreement in place, you have a duty to inform and consult employees or their representatives on - among other things - changes to the workforce. This means that you may have to inform and consult when planning to buy or sell a business.
However, you do not have to inform and consult at the same time under both TUPE and the I&C legislation - you can choose instead to 'opt out' of your I&C agreement and consult under the transfer legislation only.
What to tell TUPE representatives
The appropriate representatives must be informed of:
- the fact that the transfer is taking place, and when and why it will happen
- the legal, economic, and social implications for affected employees
- any actions, steps, or arrangements the employer envisages taking in relation to affected employees, eg redundancies, relocation, or changes to terms and conditions, or the fact that no measures will be taken
- any actions, steps, or arrangements the new employer envisages taking in relation to employees who will transfer - if the employer is the selling employer
- information relating to the use of agency workers, including the total number of agency workers engaged, the areas of the business in which they work, and the type of work they do
You must consider and respond to any representations made by the appropriate representatives, stating your reasons if you reject any of them.
When to give information to TUPE representatives
You must provide information to representatives long enough before the transfer date to give reasonable time for consultation.
The consultation must be undertaken with a view to seeking their agreement.
Rights of TUPE representatives
Representatives have the right to have:
- access to the affected employees
- access to facilities to enable them to carry out their duties, eg a phone line or office
- time off with pay to carry out representative duties
Representatives may be eligible for reinstatement or compensation if unfairly dismissed or treated detrimentally because of their status or actions as representatives.
Developed withAlso on this siteContent category
Source URL
/content/informing-and-consulting-employees-about-business-transfers
Links
Transfers of insolvent businesses
What happens in situations where employees are being transferred as part of an insolvent business.
If you are transferring a business that is subject to insolvency proceedings and you owe money to the employees to be transferred, the responsibility to pay the full amount of the money owed does not transfer to the new employer.
Redundancy Payments Service
The new employer is only responsible for the amount left after the employees have been paid from the Redundancy Payments Service (RPS). If you require further information or advice with an ongoing redundancy claim, you can call the Redundancy Payments Service Helpline on 028 9025 7562.
They should be able to make a claim through the RPS for:
- arrears of pay
- holiday pay - for days taken but not paid
They will not be able to claim statutory redundancy pay or pay in lieu of notice as - post-transfer - their job will not have ended.
For general advice on redundancies, you can get help from the Labour Relations Agency (LRA) Helpline on Tel 03300 555 300.
Permitted variations
You or the new employer - or the insolvency practitioner - can reduce pay and establish other less favourable terms and conditions after the transfer. These are known as permitted variations.
However, certain conditions must be met when doing this:
- the permitted variation must be agreed with you or the new employer - or the insolvency practitioner - and the appropriate representatives, ie trade union representatives if an independent trade union is recognised for collective bargaining purposes or, if not, elected employee representatives
- the agreement must be in writing and signed by each of the representatives or other authorised persons
- before the agreement is signed, the employer must provide all the affected employees with a copy of the agreement and any guidance the employees may need to understand it
You should also consider the following:
- any new terms and conditions agreed in a permitted variation must not breach other statutory entitlements, eg agreed pay rates must not be set below the national minimum wage
- any permitted variation must be made with the intention of safeguarding employment opportunities by ensuring the survival of the business - or part of it
Developed withAlso on this siteContent category
Source URL
/content/transfers-insolvent-businesses
Links
TUPE transfers: the impact on employee relations
Some negative effects of business transfers and how good staff relations and open communication can have a positive impact.
Transferring employees between businesses can affect staff morale. The result is often discontentment, not just in those transferred but also in staff left behind in the old business and existing employees in the new business.
Other effects on employees
If the process is not handled sensitively, the effects can include:
- feelings of displacement in the employees transferred
- anxiety among their ex-workmates who feel they might be next
- resentment among new workmates who distrust the reason the new employees have been introduced and may resent the fact that they have different terms and conditions
- a feeling of insecurity that may be common to all
However, if both employers know and meet their responsibilities fully and communicate openly throughout the process, then good relations can be maintained with all employees concerned.
Research shows that effective consultation can lead to better decision-making and smoother implementation of decisions and proposals, boosting productivity. This is because if employees feel they have input into decision-making, they will be more satisfied and motivated at work. See employee engagement.
You should be especially careful to emphasise the positive benefits of the sale or purchase and try to show how the prospects for all will be improved by the changes.
Developed withAlso on this siteContent category
Source URL
/content/tupe-transfers-impact-employee-relations
Links
Writing your grievance procedure
Grievance procedures and the employment contract
How to communicate your grievance procedure and whether or not to make it contractual.
By law, you must inform each employee of:
- the name of the person to whom they should apply to seek redress for a grievance
- how they should make this application
This information can be included in the employee's written statement of employment or the written statement may refer the employee to a document where they may find it, eg in a staff handbook.
If you fail to provide this information to an employee, and they succeed in another industrial tribunal claim against you, eg unlawful discrimination, they could be awarded two or four weeks' pay for this lapse.
The contractual status of grievance procedures
Your grievance procedure may not form part of an employment contract. Therefore, an employee may not be able to claim a breach of contract if you fail to follow it. If there is a dispute over this, it will be up to an industrial tribunal to decide on the outcome.
However, if you do choose to make your procedure contractual and you fail to follow it when dealing with a grievance, the employee could bring a breach of contract claim against you.
Read more on the employment contract.
Developed withActionsAlso on this siteContent category
Source URL
/content/grievance-procedures-and-employment-contract
Links
Writing your grievance procedure
A grievance procedure deals with grievances in a fair and reasonable manner.
If an employee has concerns or complaints about their work, employment terms, working conditions or relationships with colleagues, they may want to discuss them or bring them to your attention. They will then want you to address and, if possible, resolve these grievances.
The best way to do this is to have a grievance procedure. If it deals with grievances in a fair and reasonable manner, you're much less likely to lose valued and skilled staff through resignation. It will also help you successfully defend any industrial tribunal claim for:
- constructive dismissal - see dismissing employees
- unlawful discrimination - see how to prevent discrimination and value diversity
The duty to provide a grievance procedure
You should provide each of your employees with a written grievance procedure. Your procedure should - at the very least - follow the good practice principles set out in the Labour Relations Agency (LRA) code of practice on disciplinary and grievance procedures.
If you unreasonably fail to follow the code and the issue ends up at an industrial tribunal, the tribunal could increase the employee's compensation by up to 50%.
The content of a grievance procedure
The exact nature of your procedure will depend on the size and structure of your organisation.
However, any grievance procedure should:
- Be simple and easy to follow.
- Allow for proceedings to be kept confidential.
- Aim to settle grievances fairly and quickly.
- State how and with whom to raise the grievance in the first place.
- Indicate that you will try to resolve most grievances informally, eg by discussions with the employee's immediate manager.
- Identify an alternative person with whom a grievance should be raised if the usual person is the subject of the grievance. For example, if the line manager is the person with whom grievances should be first raised but they are the subject of the grievance, the procedure should name someone else, eg the line manager's manager.
- Set out to whom the employee should appeal if they are not satisfied with the outcome of the initial grievance hearing - see appeals against grievance decisions.
- State that, if possible, a manager previously uninvolved in the matter will hear the appeal.
- Give time limits for each stage, particularly for lodging and hearing the appeal.
- Highlight that the employee has the right to be accompanied by a fellow worker or Trade Union Official (who may be either a full-time official employed by a union or a lay union official who has been reasonably certified in writing by his/her union as having experience of, or as having received training in, acting as a worker's companion.
Help to write a grievance procedure
If you require further help drawing up your grievance procedure, the LRA has a free employment document toolkit. Once employers are registered they can unlock free core employment guides to help them build documents, policies and procedures for their own organisation. Find out how to access the LRA's free employment document toolkit.
Consulting employees on your grievance procedure
You should involve your employees and, where appropriate, their representatives, when putting together your grievance procedure.
If you have any workplace representatives, it may be advisable for you to carry out this consultation through them, ie either with the recognised trade union or, if there is none, elected employee representatives.
Developed withActionsContent category
Source URL
/content/writing-your-grievance-procedure
Links
Preparing for a grievance hearing
What you must do before you hold a grievance hearing to ensure that it runs as smoothly as possible.
Before you hold a grievance hearing:
- Read through your grievance procedure so that you apply it correctly.
- Read through the Labour Relations Agency (LRA) Code of Practice on Disciplinary and Grievance Procedures.
- Carry out a full investigation, if necessary, eg where the employee is accusing a colleague of sexual harassment.
- Obtain statements from any witnesses and share them with the employee.
- Make sure you have all relevant facts and documents available for the hearing.
- Arrange for someone to take notes.
- Arrange a suitable time, date and venue for the hearing.
- Give the employee plenty of notice of the meeting so they can prepare their case and consult any representatives. Remind them that they have the right to be accompanied at the hearing by a colleague or trade union official.
- Where appropriate, interview any manager or witnesses.
It may be necessary to have more than one grievance meeting when dealing with a grievance.
You may not have access to all of the information listed above before the first meeting. For example, the employee may provide you with information on witnesses at the meeting and you may need to investigate further, interview the witnesses concerned and meet again with the employee who has raised the grievance.
Developed withActionsAlso on this siteContent category
Source URL
/content/preparing-grievance-hearing
Links
Holding a grievance hearing
How to run a grievance hearing, informing the employee of its outcome and dealing with delays.
For any grievance hearing, you should:
- ensure that it's private and won't be interrupted
- if the grievance concerns a line manager, consider who else can hear the complaint
- tell the employee about the right to be accompanied by a work colleague or trade union official (who may be either a full-time official employed by a union or a lay union official who has been reasonably certified in writing by his/her union as having experience of or as having received training in, acting as a worker's companion
- introduce everyone and explain why they are present
- explain the reason for the hearing and how it will be conducted
- listen carefully to the person's explanation of the problem - consider whether there is another issue that might be the root cause of the grievance
- listen to any conflicting points of view
- weigh up all the evidence to see whether there is an issue you need to address
- consider adjourning the meeting if further advice or information needs to be sought
- avoid snap decisions even if the solution initially seems obvious - consider possible repercussions
It's crucial that you deal with grievances sensitively and in the strictest confidence, particularly where they concern other employees. You'll need to develop specific procedures for very sensitive claims involving unfair treatment, eg discrimination, bullying, or harassment. Read more on bullying and harassment.
Making the decision
Once the hearing is over:
- decide what action to take - try to balance fairness to the person who raised the grievance without compromising the business or other employees
- inform the person who raised the grievance and, where appropriate, any other concerned parties - in writing - of your decision and the appeal process - read more on appeals against grievance decisions
- the person who raised the grievance should be given a full explanation as to how the decision was reached
- review your grievance procedure - if this particular claim has highlighted problems
Dealing with delays
If the employee is genuinely unable to attend the grievance hearing, eg because they are ill, offer them a reasonable date and time as an alternative.
You should let your employee know that decisions may be taken in their absence if they fail to attend rearranged meetings without good reason.
If the employee's companion cannot make the rearranged hearing, the employee must propose another date and time no more than five working days after the day proposed by you.
If the employee fails to attend the rearranged hearing without good reason, this stage of the procedure is complete and you can make your decision there and then. Don't forget that you will still have to tell the employee in writing of the decision and that they have the right to appeal.
If you cannot make the rearranged hearing, you must offer the employee a reasonable alternative date and time.
Dealing with long-term absence
An employee may become anxious and stressed in the run-up to a grievance hearing, for example, if their grievance relates to another employee and they have to face this person at work. This can lead in some cases to them being absent for weeks or even months due to stress-related illness.
If this situation arises, you can ask the employee's GP and/or an occupational health specialist for a medical report. You must gain the employee's agreement before doing so.
You should ask for the report to state whether or not the worker is fit enough to attend a hearing in the near future:
- If they are deemed fit enough, you should arrange the hearing with the employee in the normal way.
- If not, you might not be able to complete the grievance procedure without unreasonable delay. In this situation, depending on the circumstances, you may be able to treat the procedure as having been completed and make a decision in the employee's absence. However, you should still tell the worker that they can supply written representation or other material if they wish.
Developed withActionsAlso on this siteContent category
Source URL
/content/holding-grievance-hearing
Links
Appeals against grievance decisions
What an employer can do when an employee appeals against the decision of the first grievance hearing.
An employee has the right to appeal against an employer's decision following the grievance hearing. You must notify them of this right when you write to give them your decision. Give them a deadline to notify you of their intention to appeal against the grievance, eg within five working days.
If the employee chooses to appeal, you must try to hold the appeal hearing without unnecessary delay.
Preparing for an appeal hearing
Before you hold an appeal hearing:
- Read through your grievance procedure to ensure that you are applying it correctly.
- Make sure you have all relevant facts and documents, especially if you have come across new evidence since the first hearing.
- Arrange for someone to take notes.
- Arrange a suitable date and venue for the appeal hearing.
- Inform the employee in plenty of time so they can prepare their case and consult any representatives. Remind them that they have the right to be accompanied at the hearing by a colleague or trade union official (who may be either a full-time official employed by a union or a lay union official who has been reasonably certified in writing by his/her union as having experience of, or as having received training in, acting as a worker's companion.
- If the appeal concerns new evidence it may be necessary to interview any manager and/or witnesses.
- This may involve obtaining additional statements.
Holding an appeal hearing
The principles for holding an appeal hearing are generally the same as for the initial grievance hearing - read more on holding a grievance hearing.
However, at the appeal hearing, you should also consider:
- the reasoning behind the appeal
- any new evidence since the earlier decision
Ideally the person hearing the appeal shouldn't be the same person that heard the initial grievance hearing, eg a more senior manager who has not been involved with the grievance process at all. They will be able to hear any appeal without having any assumptions.
However, where the person hearing the appeal is the same person who heard the first hearing, they should act impartially and make sure they review the original decision carefully.
You should write to the employee with your decision and the reason for it as soon as possible after the hearing. Make it clear, if this is the case, that the decision is final.
Dealing with delays to appeal hearings
If the employee is genuinely unable to attend the appeal hearing, eg because they are ill, offer them a reasonable date and time as an alternative.
If the employee's companion cannot make the rearranged hearing, the employee must propose another date and time no more than five working days after your proposed date.
If the employee fails to attend the rearranged hearing, this stage of the procedure is complete and you can make your decision there and then. Don't forget that you will still have to tell the employee in writing of the decision.
If you cannot make the rearranged hearing, you must offer the employee an alternative at a reasonable date and time.
It is important that you notify the employee as soon as possible of any delays to the appeal process. If you fail to do so, an industrial tribunal could increase any compensation awarded against you.
Alternative Dispute Resolution
There may be circumstances where the employer and employee feel it would be beneficial to involve a third party to help in resolving the issue, through, for example, mediation. In such instances the grievance procedure may be temporarily set aside. Where this is the case the procedure should explain where and when mediators may be used.
Mediation is a process whereby an independent third party intervenes in a workplace dispute to assist the parties to reach a satisfactory outcome. The Labour Relations Agency (LRA) can provide a mediation service to assist the parties. You can also contact the LRA directly on Tel 03300 555 300 for further information.
Developed withActionsAlso on this siteContent category
Source URL
/content/appeals-against-grievance-decisions
Links
Fixed-term employment benefits
In this guide:
- Fixed-term employment contracts
- Rights of fixed-term employees
- Fixed-term employment contracts and the 'equal treatment' principle
- Fixed-term employment contracts and 'less favourable treatment'
- Fixed-term employment benefits
- Redundancy rights of fixed-term employees
- Fixed-term employment contracts and statutory employment rights
- Limiting the use of successive fixed-term employment contracts
- Informing fixed-term employees about permanent vacancies
Rights of fixed-term employees
How to fulfil your legal obligations by granting fixed-term employees the same rights as permanent staff.
Fixed-term employees have the right not to be treated less favourably than comparable permanent employees because they are on a fixed-term contract.
This means you must treat fixed-term employees the same as comparable permanent employees unless there are 'objectively justifiable' circumstances for not doing so (ie there is a genuine, necessary, and appropriate business reason).
Therefore they must receive the same or equivalent (pro-rata) pay and conditions, benefits, pension rights, and opportunity to apply for permanent positions within the business.
When fixed-term could become permanent contracts
Under the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations (Northern Ireland), which came into operation on 1 October 2002, employees who have been on a fixed-term contract for four years or longer will usually be legally classed as permanent if their contract is renewed or if they are re-engaged on a new fixed-term contract. The Fixed-term Employees Regulations apply only to 'employees', not to the wider category of 'workers'.
Exemptions to the rule
The only exemptions to the rule above are when employment on a further fixed-term contract is objectively justified to achieve a legitimate business aim or when the period of four years has been lengthened under a collective or workplace agreement.
You also need to make the same tax arrangements for fixed-term employees as for permanent staff.
Developed withActionsAlso on this siteContent category
Source URL
/content/rights-fixed-term-employees
Links
Fixed-term employment contracts and the 'equal treatment' principle
Comparing the fixed-term employee with a comparable permanent employee.
Fixed-term employees have the right not to be treated less favourably than comparable permanent employees because of their employment status unless the different treatment can be objectively justified.
Comparing employment conditions
To assess whether they are receiving equal treatment, a fixed-term employee can compare their employment conditions to that of a comparable permanent employee. This means someone working for you on an indefinite or an indeterminate employment contract and in the same place, doing the same or similar work. Skills and qualifications are taken into account where relevant to the job.
Where a fixed-term employee does the same work as several permanent employees whose contractual terms are different, the fixed-term employee can select someone to compare themselves to.
The chances of a claim for equal treatment being successful depend on the employee selecting a similar comparator and whether there are objectively justifiable reasons for their being treated differently.
If no comparable permanent employee works in the same place, a fixed-term employee can choose someone working for you at another premises, but not someone working for a different employer.
An employee will not be a comparable permanent employee if his/her employment has ceased.
Developed withActionsAlso on this siteContent category
Source URL
/content/fixed-term-employment-contracts-and-equal-treatment-principle
Links
Fixed-term employment contracts and 'less favourable treatment'
How to avoid treating fixed-term employees less favourably than their permanent equivalents.
A fixed-term employee has the right not to be treated less favourably as regards the terms of his or her contract. A term-by-term approach is required when considering less favourable treatment in this context.
Less favourable treatment happens when a fixed-term employee does not receive conditions or benefits granted to a comparable permanent employee - or receives or is offered a benefit on less favourable terms.
Examples of less favourable treatment would include not being given a bonus or receiving fewer paid holidays than comparable permanent employees.
If you give training to permanent employees, you must not deny fixed-term employees access to it unless it can be objectively justified. In addition, permanent staff must not enjoy preferential treatment for promotion or redundancy, unless objectively justifiable.
The period of service qualifications relating to particular conditions of employment must be the same for fixed-term employees as for permanent employees except where different length of service qualifications is justified on objective grounds.
Written statement of employment
If a fixed-term employee feels less favourably treated because of their employment status or believes their rights have been infringed, they can request a written statement of employment from you detailing the reasons. You must produce this within 21 days of the request. This is your opportunity to clarify why a fixed-term employee receives particular treatment. The intention is not to allow fixed-term employees to find out what their colleagues are receiving.
If you do not believe less favourable treatment has been given, or you have objective justification for it, the statement should say so. If a package approach is being used, the statement should say that this is why different treatment is occurring with respect to one or more benefits. The statement might be used at an industrial tribunal hearing concerning a complaint under the regulations.
Although a failure to give a written statement of employment has no direct legal effect in itself, the statement is admissible in any proceedings under the regulations. A failure to provide one allows a tribunal to draw any inference it considers just and equitable (including an inference that you are in breach of the regulations) if it appears that the employer deliberately and without reasonable excuse omitted to provide a statement, or that the written statement is evasive or equivocal. A carefully drafted written statement of employment can avoid such a possibility and should be provided.
What is objective justification?
Less favourable treatment will be justified on objective grounds if you can show that it is necessary and appropriate to achieve a legitimate and genuine business objective.
Objective justification may be a matter of degree. You should consider offering fixed-term employees certain benefits (eg loans, clothing allowances, etc) on a pro-rata basis. Sometimes, the cost to you of offering certain benefits to a fixed-term employee may be disproportionate to the benefit the employee would receive. This may objectively justify different treatment.
An example of this may be where a fixed-term employee is on a contract of three months and a comparator has a company car. You may decide not to offer the car if the cost of doing so is high and the need of the business for your employee to travel can be met in some other way.
Less favourable treatment in relation to particular contractual terms is justified where the fixed-term employee's overall package of terms and conditions is no less favourable than the comparable permanent employee's overall package.
How do employers objectively justify different conditions?
You can argue that there is objective justification for treating the fixed-term employee differently.
Alternatively, you may prove that the value of the fixed-term employee's overall terms and conditions at least equal the value of those of the comparable permanent employee.
You will need to consider whether less favourable treatment is objectively justified on a case-by-case basis, either comparing term-by-term or comparing a package of terms and conditions.
Developed withActionsAlso on this siteContent category
Source URL
/content/fixed-term-employment-contracts-and-less-favourable-treatment
Links
Fixed-term employment benefits
Employment benefits that can be offered to fixed-term employees.
Some employment benefits such as season ticket loans, health insurance or staff discounts can be offered on an annual basis or over a specified period. Where a fixed-term employee is not expected to work for this period, you might offer it in proportion to the contract duration ('pro-rata').
For example, if the contract is for six months, the employee should receive half of an annual benefit. If the contract is for four months, they should receive one-third.
If this is not possible because the cost to you would outweigh the benefit to the employee, you can claim objective justification for not offering the benefit.
You need to consider whether less favourable treatment is objectively justified on a case-by-case basis. See fixed-term contracts and 'less favourable treatment'.
Access to occupational pension schemes
You must offer fixed-term employees access to occupational pension schemes on the same basis as permanent staff unless different treatment is objectively justified.
For example, if a pension scheme has been closed to new permanent employees, new fixed-term employees need not be offered access, even if their permanent comparator has access. It is important that the point at which employees have joined a company in order to have been offered access to the scheme is the same for fixed-term as for permanent employees unless a difference is objectively justified.
You do not need to offer special alternative benefits (eg contributions to a private pension scheme) to fixed-term employees who decide not to join a pension scheme unless this option is offered to comparable permanent employees.
In certain situations, it may not be necessary to offer all fixed-term employees access to occupational pension schemes. For example, where an employee is on a fixed-term contract that is shorter than the vesting period for a pension scheme, or you offer the employee a salary increase equivalent to employer pension contributions paid to permanent staff, you may be able to justify excluding them from the scheme. See know your legal obligations on pensions.
In addition, the Pensions (No.2) Act (Northern Ireland) 2008 introduced obligations on employers to provide access to and contribute towards, a workplace pension scheme for eligible employees.
Every employer must enrol workers into a workplace pension if they meet certain criteria. See automatic enrolment into a workplace pension.
Developed withActionsAlso on this siteContent category
Source URL
/content/fixed-term-employment-benefits
Links
Redundancy rights of fixed-term employees
Employer obligations to grant fixed-term employees their legal redundancy rights.
Fixed-term employees have a right to statutory redundancy pay if they have been continuously employed for two years or more. Redundancy is defined in statute and the Labour Relations Agency (LRA) can provide you with information and advice on redundancy.
When a fixed-term contract terminates and is not renewed, the employee is dismissed. The reason for this dismissal will not always be redundancy - this will depend on whether you are laying off employees of the type that the fixed-term employee is, or whether there is some other reason for not renewing the contract (for example, the fixed-term employee was covering for an absent member of permanent staff).
Fixed-term employees cannot be excluded from the statutory redundancy payments scheme. However, they can be excluded from contractual schemes if this is objectively justified.
Fixed-term employees should receive the same level of redundancy payments as permanent employees unless different treatment is objectively justified.
You also need to consider whether fixed-term employees are being treated fairly in relation to other elements of redundancy packages, eg have the same access to specialist job search services as comparable permanent employees. Different treatment may be objectively justified and it is more likely to be so if the fixed-term employee did not expect their employment to last longer than the term of their first contract.
Selection for redundancy
Fixed-term employees cannot be selected for redundancy simply because of their employment status. Where fixed-term employees have been brought in to complete a particular task or as cover over a peak period, you can objectively justify selecting them for redundancy at the end of their contracts.
Length of service (Last In First Out) should never be used as sole/main criteria in a redundancy situation as it may indirectly discriminate on the grounds of age (and potentially religion, where an employer has been taking positive action to address an underrepresentation from one community in their workforce). It can be used in conjunction with other criteria or perhaps applied in tie-break situations. See redundancy selection: non compulsory and redundancy selection: compulsory.
Developed withActionsAlso on this siteContent category
Source URL
/content/redundancy-rights-fixed-term-employees
Links
Fixed-term employment contracts and statutory employment rights
Handle fixed-term redundancies legally when tasks or events are completed.
If an employment contract terminates when a task is completed or an event occurs or does not occur, this is legally classified as dismissal.
This gives fixed-term employees the same statutory rights as permanent employees or others on different fixed-term contracts, including the right:
- not to be unfairly dismissed (after one year's continuous employment)
- to a written statement of reasons for dismissal (after one year)
- to statutory redundancy payments (after two years)
Developed withAlso on this siteContent category
Source URL
/content/fixed-term-employment-contracts-and-statutory-employment-rights
Links
Limiting the use of successive fixed-term employment contracts
When renewed fixed-term employment contracts become permanent.
If a fixed-term employee has their employment contract renewed or if they are re-engaged on a new fixed-term employment contract when they already have a period of four or more years of continuous employment, the renewal or new contract takes effect as a permanent contract (unless employment on a fixed-term contract was objectively justified or the period of four years has been lengthened under a collective or workplace agreement).
If however a fixed-term employee has had their contract renewed at least once before the four-year period has elapsed, the employee's contract will become permanent after they have completed a total of four years' service. The only exceptions are when employment on a fixed-term contract can be objectively justified, or if the period of four years has been lengthened under a collective or workplace agreement.
Continuous employment usually means employment without a break, although breaks for strike action and time spent out of work appealing against unfair dismissal (if the employee is subsequently reinstated) will not break continuity. The interval between contracts that result in continuous service being broken is determined by case law and statute and varies according to the circumstances.
Renewing or extending fixed-term employment contracts
If an employee has a fixed-term contract renewed before or extended beyond the four-year statutory limit (or beyond the limit agreed in any applicable collective or workplace agreement), the contract will be regarded as one of indefinite duration.
An employee whose employment contract is renewed as a fixed-term contract, or re-engaged under a fixed-term contract, after the four-year period has the right to ask you in writing for a written statement of employment to confirm that they are now a permanent employee. You must produce the written statement of employment within 21 days and if you maintain that the employee is still fixed-term, you must explain the reasons why. The statement may be used at an industrial tribunal hearing if your employee decides to make a claim. See the written statement.
Once the employee's contract is regarded as permanent, statutory minimum notice periods apply unless longer periods are contractually agreed.
The limitation on successive fixed-term employment contracts will apply only where the employee has been continuously employed for the whole period. An employee may be continuously employed even where there is a gap between successive contracts. See continuous employment and employee rights.
Fixed-term contract renewal may be justified on objective grounds if it is necessary and appropriate to achieve a legitimate objective, for example, a genuine business objective.
Collective and workplace agreements
Such agreements provide an alternative scheme for preventing abuses of fixed-term employment contracts and can be made to vary the limit on the duration of successive fixed-term contracts upwards or downwards, or to limit the use of successive fixed-term contracts by applying one or more of the following:
- a limit on the total duration of successive fixed-term employment contracts
- a limit on the number of successive fixed-term employment contracts
- a list of permissible objective reasons justifying renewals of fixed-term employment contracts
You and your employees may agree on reasons for renewing fixed-term contracts, including the specific needs of particular professions, for example, professional sport and theatre. It is important that these reasons do not permit the abuse of successive fixed-term contracts.
A collective agreement is made between an employer or association/group of employers and trade union representatives. A workforce agreement is made between representatives of a workforce and an employer.
Workforce agreements can apply only to groups of employees whose terms and conditions of employment are not covered by a collective agreement. Where a union is recognised to negotiate terms and conditions of employment any variations must be made through a collective agreement.
Developed withAlso on this siteContent category
Source URL
/content/limiting-use-successive-fixed-term-employment-contracts
Links
Informing fixed-term employees about permanent vacancies
Fulfil your legal obligations to fixed-term employees when permanent positions arise.
You must inform fixed-term employees of permanent vacancies in your organisation, and give them the same opportunity as others to apply for such roles.
You should inform fixed-term and permanent employees of such vacancies at the same time and in the same way. Displaying a vacancy notice where all employees can see it or emailing the vacancy to all staff members will usually enable you to do this effectively.
Industrial Tribunals
Finally, under the regulations, a fixed-term employee may present a claim to an Industrial Tribunal alleging that they have not been informed of available vacancies or that they have suffered a detriment, or less favourable treatment. If you receive such a complaint you can contact the Labour Relations Agency (LRA). Its conciliation service applies to such claims. See details of the LRA's dispute resolution services.
Developed withAlso on this siteContent category
Source URL
/content/informing-fixed-term-employees-about-permanent-vacancies
Links
Appealing against an employment-related tribunal judgment
In this guide:
- Outcomes of employment-related tribunal claims
- Possible outcomes from employment-related tribunal cases
- Compensation for successful employment-related tribunal claims
- Tribunal/Arbitration compensation amounts and adjustments
- Recouping state benefits from employment-related tribunal awards
- Getting an employment-related tribunal to review its judgment or decision
- Appealing against an employment-related tribunal judgment
Possible outcomes from employment-related tribunal cases
The various outcomes from an employment-related tribunal case.
You may either succeed in defending a tribunal claim or lose the claim - in whole or in part.
If you lose an unfair dismissal case, you may be ordered to comply with one of the following orders:
- Reinstatement to the old job as if the claimant had never been away, on the same terms and conditions and with back pay and benefits - eg pension rights - for the period since the dismissal.
- Re-engagement in a new job on similar terms and conditions to the old position. You may not have to pay any back pay if the employee's conduct contributed to their dismissal.
- Financial compensation, which is by far the most common outcome - see compensation for successful employment tribunal claims.
Tribunals/arbitrators will only order reinstatement or re-engagement if they believe it can actually work. If you are ordered to re-employ the employee but you do not comply, it may increase the financial compensation.
Costs and expenses
Costs can be awarded in exceptional circumstances by the Tribunal, where they consider one party has acted unreasonably in pursuing or conducting their case. For example:
- A cost award can be made to cover legal costs for parties who were legally represented at the time the case was heard.
- A preparation time award covers time spent preparing for a case for a party who isn't legally represented.
- Wasted costs orders are made directly against a paid representative on account of their own unreasonable conduct. This only applies to representatives who are acting in pursuit of profit, eg paid legal representatives.
The limit on costs that the tribunal may itself award is £10,000, but a tribunal may order costs as assessed by an officer of the County Court, in which case the limit does not apply. Parties may also agree that costs of more than £10,000 are to be paid.
Cost awards cannot be made by an arbitrator.
Developed withAlso on this siteContent category
Source URL
/content/possible-outcomes-employment-related-tribunal-cases
Links
Compensation for successful employment-related tribunal claims
The award to the claimant of financial compensation is the most common outcome of a successful tribunal claim.
The award to the claimant of financial compensation is the most common outcome of a successful tribunal claim.
Compensation in discrimination cases
There is no limit on the amount of compensation which can be awarded in cases of unlawful discrimination. Read how to prevent discrimination and value diversity.
Compensation in unfair dismissal cases
There are three types of compensation for unfair dismissal:
- basic awards
- compensatory awards
- additional awards
Basic award
The basic award depends on:
- The employee's age - counting back from the date of dismissal, they receive 1.5 weeks' pay for each year of employment after their 41st birthday, one week's pay for each year of employment after their 22nd birthday and 0.5 week's pay for each year of employment up to their 22nd birthday.
- Their length of service with you - counting back from the date of dismissal, this is capped at 20 years.
- Their weekly pay - this is subject to the statutory limit on a week's pay, which is currently £669.
Therefore:
- the maximum basic award is 1.5 x 20 = 30 weeks' pay
- the maximum amount that can be awarded is 30 x £729 = £21,870
Compensatory award
The compensatory award is based on the tribunal's/arbitrator's assessment of the employee's loss of earnings between the dismissal and the tribunal/arbitration hearing, and the likely future loss of earnings, loss of pension rights etc.
Reinstatement or re-engagement orders
If you do not comply with an order for reinstatement or re-engagement the tribunal/arbitrator can make an additional award.
The award is on top of any previous award and can be between 26 and 52 weeks' pay - although this is again subject to the £729 statutory limit on a week's pay.
Compensation in collective redundancy cases - failure to consult representatives
In a collective redundancy situation, you have a legal duty to consult with representatives of those employees affected by the proposed redundancies.
If you fail to do this, an employee or a representative may apply to a tribunal for a protective award. If the tribunal decides in their favour, it may order you to pay each affected employee up to 90 days' pay.
This payment is calculated on the basis of a week's pay. Note that if you are made to pay such an award, there is no statutory cap on a week's pay.
For more information on collective redundancy consultation, see redundancy: the options.
Compensation in business transfer cases - failure to inform and consult representatives
In business transfer situations, you must inform and consult with representatives of those employees affected by the transfer.
If you fail to do this, an employee or a representative may apply to a tribunal for compensation. If the tribunal or arbitrator decides in their favour, it may award compensation to each affected employee of up to 13 weeks' pay.
Note that for such awards, there is no statutory cap on a week's pay.
Read more on informing and consulting employees about business transfers.
Guarantee pay
If you do not require an employee to work on a day when they would normally be contractually obliged to work, you may be required to make a guarantee payment to them. Failure to pay an employee who is entitled to guarantee pay is unlawful and the employee may take you to a tribunal. If the tribunal or arbitrator finds in the employee's favour you may be ordered to pay the employee the guarantee pay.
In order to be entitled to guarantee pay, the employee must meet certain requirements. For more information on guarantee pay and to find out if your employees may be entitled to guarantee pay, see guarantee pay: employee entitlement.
Compensation in trade union-related cases
There is a separate award for cases in which the tribunal/arbitrator finds that you have made unlawful inducements to individuals in relation to their trade union membership/activities and collective bargaining.
Read more on trade union membership rights in the workplace.
Compensation in breach-of-contract cases
Where an employee makes a breach of contract claim to an industrial tribunal (or an employer makes a counterclaim), there is a maximum amount that may be awarded in respect of that claim (or of a number of claims arising from the same breach of contract).
For details of minimum and maximum amounts and how these may be adjusted, see tribunal/arbitration compensation amounts and adjustments.
Developed withAlso on this siteContent category
Source URL
/content/compensation-successful-employment-related-tribunal-claims
Links
Tribunal/Arbitration compensation amounts and adjustments
The amount of compensation awarded following a tribunal process will depend on the nature and outcome of the case.
The amount of compensation awarded following a tribunal/arbitration process will depend on the nature and outcome of the case.
The limits on certain awards and payments are varied annually according to the Retail Price Index.
Tribunal/Arbitration awards can be increased or decreased if the employer or employee unreasonably failed to follow appropriate disciplinary or grievance procedures.
An award can also be decreased where the claimant is found to have contributed to their dismissal by their actions. This is known as contributory conduct and can result in awards being reduced by up to 100%.
The arbitrator will apply the same rules as the tribunal when calculating awards.
See a table of current tribunal and arbitration compensation limits.
Adjustments to tribunal awards
A tribunal/arbitrator may increase any award made to an employee in respect of unfair dismissal by between 10% and 50% if you unreasonably failed to comply with the statutory disciplinary procedures referred to within the Labour Relations Agency (LRA) Code of Practice on Disciplinary and Grievance procedures. The tribunal/arbitrator can also reduce an award by between 10% and 50% if the employee unreasonably failed to comply with the statutory procedures.
A tribunal/arbitrator may vary any award made to an employee in respect of workplace grievances by up to 50% (either up or down) where there has been an unreasonable failure by either party to observe the good practices set out in the LRA Code of Practice on Disciplinary and Grievance procedures.
Read about the LRA Code of Practice on Disciplinary and Grievance procedures.
Interest on tribunal awards - Industrial/Fair Employment Tribunal
If you do not pay an award within 42 days of the date when the tribunal's decision is sent to the parties, you will start paying interest only on the amount of award outstanding.
In cases of unlawful discrimination judgments, interest accrues from the date the decision is sent to the parties. However, no interest is charged if you pay the award in full within 14 days.
Interest on tribunal awards - Arbitration
If you do not pay an award within 42 days of the date when the arbitrator's decision is sent to the parties, you will start paying interest only on the amount of award outstanding.
Amounts recouped by the Social Security Agency (SSA) are not included in the calculation of interest - see recouping state benefits from employment-related tribunal awards.
Failure to pay tribunal awards
If you are an employer and you fail to pay an Industrial Tribunal/Fair Employment Tribunal or Arbitrator's award made against you, enforcement action can be taken through the Enforcement of Judgments Office (EJO).
Any enforcement action will result in additional costs being incurred and these will be added to the outstanding amount due. You will have to pay these costs as well as the original award. The claimant may also be able to charge interest on the amount owed. Enforcement action through the EJO may also impact adversely on your credit rating.
Read about the Enforcement of Judgments Office.
Deductions for income tax and National Insurance
Where the employment relationship has already ceased, you do not normally have to deduct income tax and National Insurance contributions (NICs) from tribunal/arbitrator awards (these awards are generally based on net pay).
However, if:
- an award is over £30,000, income tax may be payable
- a tribunal orders reinstatement or re-engagement, you must deduct income tax and NICs from the pay for the period between the date of dismissal and the date of reinstatement or re-engagement
To find out more about your tax and NICs obligations, contact the HMRC Employer Helpline on Tel 0300 200 3200.
Developed withHelpAlso on this siteContent category
Source URL
/content/tribunalarbitration-compensation-amounts-and-adjustments
Links
Recouping state benefits from employment-related tribunal awards
About the recouping of state benefits from employment-related tribunal awards.
To prevent double payment, the Social Security Agency (SSA) can recover from you some or all of the amount of Jobseeker's Allowance, Income Related Employment, and Support Allowance and Income Support ('state benefit') it pays to an ex-worker who is then awarded compensation by an employment-related tribunal. This process is known as 'recoupment'.
Cases where the recoupment rules apply
These rules apply when a tribunal makes a monetary award for:
- unfair dismissal - including interim relief orders
- failure to make a guarantee payment
- failure to pay an individual employee a protective award
- failure to pay wages during a period of medical or maternity suspension
- compensatory awards in discrimination cases
The rules also apply to awards for failure to consult workplace representatives in collective redundancy situations, ie protective awards themselves.
Recoupment and monetary awards
If an individual receives state benefit during the period covered by a monetary award, the SSA must be repaid any benefit received during this period.
Any amount of the award that represents arrears of pay - or compensation for loss of earnings - up to the date of a tribunal is recoverable by the SSA. This part of an award is called the 'prescribed element' and is the only part of the award that can be recouped.
Recoupment and monetary awards - Tribunal
Where an award of compensation is made by a tribunal, the tribunal will identify how much of the award represents arrears of pay up to the date of the tribunal hearing (prescribed element).
You should pay the employee the difference between the prescribed element and the total award immediately.
However, you must not pay the prescribed element to the individual until you receive a recoupment notice from the SSA. If you pay the prescribed element to the individual beforehand, you will still have to pay the SSA the amount specified in the notice.
You will receive a notification from the SSA:
- where a judgment is announced at the tribunal hearing - within 21 days following the announcement or within nine days of the judgment being sent to the parties, whichever is later, or as soon as practicable after this period
- where no such announcement is made - within 21 days of the judgment being sent to the parties or as soon as practicable after this period
The recoupment notice will tell you to pay the lesser of:
- the prescribed element - after any income tax and National Insurance contributions (NICs) due have been deducted
- the total amount of state benefit received by the individual for any part of the period covered by the prescribed element
When you receive notification, you must - if you haven't already - immediately pay the difference between the prescribed element and the total award to the employee.
Recoupment and monetary awards - Arbitration
Where an award of compensation is made by an arbitrator, it will be the responsibility of the claimant to discuss any recoupment required with the SSA. For reasons of confidentiality, the arbitrator will not disclose any information directly to the SSA but will advise the claimant in writing of their obligations.
Recoupment and protective awards
If an industrial tribunal or arbitrator finds that you failed to consult workplace representatives in a collective redundancy situation, you may be required to pay a protective award to the redundant employees or those you proposed to make redundant.
Read about the redundancy consultation process.
Recoupment and protective awards - Tribunals
When an industrial tribunal makes a protective award, it will notify the SSA and advise you to send the SSA the following information:
- the name, address, and National Insurance number of each employee entitled to a payment under the award
- the date - or proposed date - of termination of employment of each employee covered by the award
You must send the information within ten days of the judgment being announced at the hearing or, if not when it was sent to the parties. If you can't meet this deadline, you must do it as soon as reasonably practicable.
The SSA will send you a recoupment notice within 21 days of receiving the above information or as soon as practicable. You must not pay any employee who has claimed or received 'state benefit' until you receive this notice.
The recoupment notice will tell you to pay a specified amount to the SSA out of the amount due under the award. This amount will be the lesser of the:
- amount due - after the deduction of any income tax and NICs - from the start of the protective award period to when you sent the SSA the necessary information
- total amount of the 'state benefit' received by an employee for any part of the same period
Once you receive notification, you must immediately pay the employees any difference between the recoupment amount and the total protective award.
If you pay an employee this amount before receiving a recoupment notice, you will still have to pay the SSA the amount specified in the notice.
Recoupment and protective awards - Arbitration
Where an arbitrator makes a protective award it will be the responsibility of the claimant to discuss any recoupment required with the SSA. For reasons of confidentiality, the arbitrator will not disclose any information directly to the SSA but will advise the claimant in writing of their obligations.
Recoupment following appeals - Tribunal decisions
If you appeal - or apply for a review - the SSA should suspend recoupment until the outcome is known.
If the SSA has already recouped and the amount of recoupable benefit is subsequently altered as a result of an appeal or review, the SSA will pay back any excess or recover a further amount as appropriate.
Recoupment following an appeal or challenge to an award made by an arbitrator
Where an appeal or a challenge is lodged in respect of an award made by an arbitrator, the claimant should notify the Social Security Agency and seek guidance from them on the timing of any recoupment that may apply.
Developed withAlso on this siteContent category
Source URL
/content/recouping-state-benefits-employment-related-tribunal-awards
Links
Getting an employment-related tribunal to review its judgment or decision
Employment-related tribunal judgments and decisions may be changed only in certain circumstances.
The following information applies only to reviews and appeals of cases that are determined by the Industrial/Fair Employment Tribunal.
To read more about appealing/challenging an arbitrator's award, read the Labour Relations Agency guide to the Arbitration Scheme. Section 9 provides further details on appealing/challenging the award.
Employment-related tribunal judgments and decisions may be changed only:
- if the tribunal decides - at the request of either side or on its own initiative - to review the judgment
- after an appeal by one of the sides involved in the judgment - see appealing against an employment-related tribunal judgment
Getting a tribunal to review a default judgment
You can apply to the tribunal to ask it to review a default judgment. A default judgment is a decision made on a tribunal claim in the absence of a response to a claim within the time limit, or not at all. If it is issued, an employer will not be able to take any further part in the proceedings dealing with the claim. You must apply in writing within 14 days of the date the judgment was sent to you by the tribunal office. Your application must state why the default judgment should be reviewed.
An employment judge may extend the time limit for reviewing a default judgment but only if they think it is just and equitable to do so.
In these circumstances, your application must include:
- your response to the claim
- an application to extend the time limit for presenting the response
- an explanation of why the tribunal did not receive a response containing the necessary information or an application to extend the time limit within the time limit for responding
The tribunal has the power to refuse to review the default judgment, confirm it, change it or revoke it.
Getting a tribunal to review other judgments and decisions
You can apply to the tribunal to ask it to review a:
- decision not to accept your response to a claim
- non-default judgment - ie a judgment other than a default judgment
You must apply in writing within 14 days of the date the judgment was sent by the tribunal office. An employment judge may extend the time limit for reviewing a judgment but only if they think it is just and equitable to do so.
The tribunal may review a decision not to accept your response to a claim if:
- it is in the interests of justice, or
- the decision was wrongly made as a result of an administrative mistake
The tribunal may review a non-default judgment only where:
- The judgment was made in the absence of one side.
- The judgment was wrongly made as a result of an administrative mistake.
- One side did not receive notice of the proceedings leading to the judgment.
- New evidence has become available since the end of the hearing to which the judgment relates, provided its existence could not have reasonably been known at that time.
- It is in the interests of justice to carry out a review. This does not mean a judgment or decision will be reviewed just because you disagree with it. Something must have gone wrong at - or in connection with - the hearing or something must have happened since the hearing which makes the judgment or decision unjust.
If you apply for a review based on new evidence, you must explain why the evidence was not available beforehand and include a full statement of the evidence which you want to introduce.
The tribunal has the power to refuse to review the judgment or decision, confirm it, change it or revoke it.
Relationship between an application for review and appeal
An application for review does not change the time limit for making an appeal to the Court of Appeal, ie you may appeal to the Court of Appeal while waiting for the result of the application - see appealing against an employment-related tribunal judgment.
You must also lodge with the Court of Appeal a copy of the application for review and, if the application has been heard and determined, a copy of the tribunal's decision on the review.
Developed withHelpAlso on this siteContent category
Source URL
/content/getting-employment-related-tribunal-review-its-judgment-or-decision
Links
Appealing against an employment-related tribunal judgment
When you can appeal against an employment-related tribunal judgment.
You may only appeal to the Court of Appeal on a point of law.
Broadly, a point of law is one that concerns the interpretation of the legislation and its application to the facts of the case.
Where an Industrial Tribunal or the Fair Employment Tribunal has made findings of fact based on the evidence it has read or heard, eg where the tribunal sets out what they believed actually happened, or why someone acted as they did, you cannot challenge this - even if you think that the tribunal was wrong to make those findings.
As well as appeals against judgments, appeals to the Court of Appeal can also be made against Interim decisions, directions or orders made by a tribunal. An appeal to the Court of Appeal may therefore be made where, for example, the tribunal has granted or refused to grant a witness order, a postponement or a deadline extension.
If you intend to take a case to the Court of Appeal you are strongly advised to seek further information and advice.
Appealing/Challenging an Award made by an arbitrator
To find out more about appealing/challenging an award, read a Labour Relations Agency guide to the Arbitration Scheme. Section 9 provides further details on appealing/challenging the award.
Developed withHelpAlso on this siteContent category
Source URL
/content/appealing-against-employment-related-tribunal-judgment
Links
Getting an employment-related tribunal to review its judgment or decision
In this guide:
- Outcomes of employment-related tribunal claims
- Possible outcomes from employment-related tribunal cases
- Compensation for successful employment-related tribunal claims
- Tribunal/Arbitration compensation amounts and adjustments
- Recouping state benefits from employment-related tribunal awards
- Getting an employment-related tribunal to review its judgment or decision
- Appealing against an employment-related tribunal judgment
Possible outcomes from employment-related tribunal cases
The various outcomes from an employment-related tribunal case.
You may either succeed in defending a tribunal claim or lose the claim - in whole or in part.
If you lose an unfair dismissal case, you may be ordered to comply with one of the following orders:
- Reinstatement to the old job as if the claimant had never been away, on the same terms and conditions and with back pay and benefits - eg pension rights - for the period since the dismissal.
- Re-engagement in a new job on similar terms and conditions to the old position. You may not have to pay any back pay if the employee's conduct contributed to their dismissal.
- Financial compensation, which is by far the most common outcome - see compensation for successful employment tribunal claims.
Tribunals/arbitrators will only order reinstatement or re-engagement if they believe it can actually work. If you are ordered to re-employ the employee but you do not comply, it may increase the financial compensation.
Costs and expenses
Costs can be awarded in exceptional circumstances by the Tribunal, where they consider one party has acted unreasonably in pursuing or conducting their case. For example:
- A cost award can be made to cover legal costs for parties who were legally represented at the time the case was heard.
- A preparation time award covers time spent preparing for a case for a party who isn't legally represented.
- Wasted costs orders are made directly against a paid representative on account of their own unreasonable conduct. This only applies to representatives who are acting in pursuit of profit, eg paid legal representatives.
The limit on costs that the tribunal may itself award is £10,000, but a tribunal may order costs as assessed by an officer of the County Court, in which case the limit does not apply. Parties may also agree that costs of more than £10,000 are to be paid.
Cost awards cannot be made by an arbitrator.
Developed withAlso on this siteContent category
Source URL
/content/possible-outcomes-employment-related-tribunal-cases
Links
Compensation for successful employment-related tribunal claims
The award to the claimant of financial compensation is the most common outcome of a successful tribunal claim.
The award to the claimant of financial compensation is the most common outcome of a successful tribunal claim.
Compensation in discrimination cases
There is no limit on the amount of compensation which can be awarded in cases of unlawful discrimination. Read how to prevent discrimination and value diversity.
Compensation in unfair dismissal cases
There are three types of compensation for unfair dismissal:
- basic awards
- compensatory awards
- additional awards
Basic award
The basic award depends on:
- The employee's age - counting back from the date of dismissal, they receive 1.5 weeks' pay for each year of employment after their 41st birthday, one week's pay for each year of employment after their 22nd birthday and 0.5 week's pay for each year of employment up to their 22nd birthday.
- Their length of service with you - counting back from the date of dismissal, this is capped at 20 years.
- Their weekly pay - this is subject to the statutory limit on a week's pay, which is currently £669.
Therefore:
- the maximum basic award is 1.5 x 20 = 30 weeks' pay
- the maximum amount that can be awarded is 30 x £729 = £21,870
Compensatory award
The compensatory award is based on the tribunal's/arbitrator's assessment of the employee's loss of earnings between the dismissal and the tribunal/arbitration hearing, and the likely future loss of earnings, loss of pension rights etc.
Reinstatement or re-engagement orders
If you do not comply with an order for reinstatement or re-engagement the tribunal/arbitrator can make an additional award.
The award is on top of any previous award and can be between 26 and 52 weeks' pay - although this is again subject to the £729 statutory limit on a week's pay.
Compensation in collective redundancy cases - failure to consult representatives
In a collective redundancy situation, you have a legal duty to consult with representatives of those employees affected by the proposed redundancies.
If you fail to do this, an employee or a representative may apply to a tribunal for a protective award. If the tribunal decides in their favour, it may order you to pay each affected employee up to 90 days' pay.
This payment is calculated on the basis of a week's pay. Note that if you are made to pay such an award, there is no statutory cap on a week's pay.
For more information on collective redundancy consultation, see redundancy: the options.
Compensation in business transfer cases - failure to inform and consult representatives
In business transfer situations, you must inform and consult with representatives of those employees affected by the transfer.
If you fail to do this, an employee or a representative may apply to a tribunal for compensation. If the tribunal or arbitrator decides in their favour, it may award compensation to each affected employee of up to 13 weeks' pay.
Note that for such awards, there is no statutory cap on a week's pay.
Read more on informing and consulting employees about business transfers.
Guarantee pay
If you do not require an employee to work on a day when they would normally be contractually obliged to work, you may be required to make a guarantee payment to them. Failure to pay an employee who is entitled to guarantee pay is unlawful and the employee may take you to a tribunal. If the tribunal or arbitrator finds in the employee's favour you may be ordered to pay the employee the guarantee pay.
In order to be entitled to guarantee pay, the employee must meet certain requirements. For more information on guarantee pay and to find out if your employees may be entitled to guarantee pay, see guarantee pay: employee entitlement.
Compensation in trade union-related cases
There is a separate award for cases in which the tribunal/arbitrator finds that you have made unlawful inducements to individuals in relation to their trade union membership/activities and collective bargaining.
Read more on trade union membership rights in the workplace.
Compensation in breach-of-contract cases
Where an employee makes a breach of contract claim to an industrial tribunal (or an employer makes a counterclaim), there is a maximum amount that may be awarded in respect of that claim (or of a number of claims arising from the same breach of contract).
For details of minimum and maximum amounts and how these may be adjusted, see tribunal/arbitration compensation amounts and adjustments.
Developed withAlso on this siteContent category
Source URL
/content/compensation-successful-employment-related-tribunal-claims
Links
Tribunal/Arbitration compensation amounts and adjustments
The amount of compensation awarded following a tribunal process will depend on the nature and outcome of the case.
The amount of compensation awarded following a tribunal/arbitration process will depend on the nature and outcome of the case.
The limits on certain awards and payments are varied annually according to the Retail Price Index.
Tribunal/Arbitration awards can be increased or decreased if the employer or employee unreasonably failed to follow appropriate disciplinary or grievance procedures.
An award can also be decreased where the claimant is found to have contributed to their dismissal by their actions. This is known as contributory conduct and can result in awards being reduced by up to 100%.
The arbitrator will apply the same rules as the tribunal when calculating awards.
See a table of current tribunal and arbitration compensation limits.
Adjustments to tribunal awards
A tribunal/arbitrator may increase any award made to an employee in respect of unfair dismissal by between 10% and 50% if you unreasonably failed to comply with the statutory disciplinary procedures referred to within the Labour Relations Agency (LRA) Code of Practice on Disciplinary and Grievance procedures. The tribunal/arbitrator can also reduce an award by between 10% and 50% if the employee unreasonably failed to comply with the statutory procedures.
A tribunal/arbitrator may vary any award made to an employee in respect of workplace grievances by up to 50% (either up or down) where there has been an unreasonable failure by either party to observe the good practices set out in the LRA Code of Practice on Disciplinary and Grievance procedures.
Read about the LRA Code of Practice on Disciplinary and Grievance procedures.
Interest on tribunal awards - Industrial/Fair Employment Tribunal
If you do not pay an award within 42 days of the date when the tribunal's decision is sent to the parties, you will start paying interest only on the amount of award outstanding.
In cases of unlawful discrimination judgments, interest accrues from the date the decision is sent to the parties. However, no interest is charged if you pay the award in full within 14 days.
Interest on tribunal awards - Arbitration
If you do not pay an award within 42 days of the date when the arbitrator's decision is sent to the parties, you will start paying interest only on the amount of award outstanding.
Amounts recouped by the Social Security Agency (SSA) are not included in the calculation of interest - see recouping state benefits from employment-related tribunal awards.
Failure to pay tribunal awards
If you are an employer and you fail to pay an Industrial Tribunal/Fair Employment Tribunal or Arbitrator's award made against you, enforcement action can be taken through the Enforcement of Judgments Office (EJO).
Any enforcement action will result in additional costs being incurred and these will be added to the outstanding amount due. You will have to pay these costs as well as the original award. The claimant may also be able to charge interest on the amount owed. Enforcement action through the EJO may also impact adversely on your credit rating.
Read about the Enforcement of Judgments Office.
Deductions for income tax and National Insurance
Where the employment relationship has already ceased, you do not normally have to deduct income tax and National Insurance contributions (NICs) from tribunal/arbitrator awards (these awards are generally based on net pay).
However, if:
- an award is over £30,000, income tax may be payable
- a tribunal orders reinstatement or re-engagement, you must deduct income tax and NICs from the pay for the period between the date of dismissal and the date of reinstatement or re-engagement
To find out more about your tax and NICs obligations, contact the HMRC Employer Helpline on Tel 0300 200 3200.
Developed withHelpAlso on this siteContent category
Source URL
/content/tribunalarbitration-compensation-amounts-and-adjustments
Links
Recouping state benefits from employment-related tribunal awards
About the recouping of state benefits from employment-related tribunal awards.
To prevent double payment, the Social Security Agency (SSA) can recover from you some or all of the amount of Jobseeker's Allowance, Income Related Employment, and Support Allowance and Income Support ('state benefit') it pays to an ex-worker who is then awarded compensation by an employment-related tribunal. This process is known as 'recoupment'.
Cases where the recoupment rules apply
These rules apply when a tribunal makes a monetary award for:
- unfair dismissal - including interim relief orders
- failure to make a guarantee payment
- failure to pay an individual employee a protective award
- failure to pay wages during a period of medical or maternity suspension
- compensatory awards in discrimination cases
The rules also apply to awards for failure to consult workplace representatives in collective redundancy situations, ie protective awards themselves.
Recoupment and monetary awards
If an individual receives state benefit during the period covered by a monetary award, the SSA must be repaid any benefit received during this period.
Any amount of the award that represents arrears of pay - or compensation for loss of earnings - up to the date of a tribunal is recoverable by the SSA. This part of an award is called the 'prescribed element' and is the only part of the award that can be recouped.
Recoupment and monetary awards - Tribunal
Where an award of compensation is made by a tribunal, the tribunal will identify how much of the award represents arrears of pay up to the date of the tribunal hearing (prescribed element).
You should pay the employee the difference between the prescribed element and the total award immediately.
However, you must not pay the prescribed element to the individual until you receive a recoupment notice from the SSA. If you pay the prescribed element to the individual beforehand, you will still have to pay the SSA the amount specified in the notice.
You will receive a notification from the SSA:
- where a judgment is announced at the tribunal hearing - within 21 days following the announcement or within nine days of the judgment being sent to the parties, whichever is later, or as soon as practicable after this period
- where no such announcement is made - within 21 days of the judgment being sent to the parties or as soon as practicable after this period
The recoupment notice will tell you to pay the lesser of:
- the prescribed element - after any income tax and National Insurance contributions (NICs) due have been deducted
- the total amount of state benefit received by the individual for any part of the period covered by the prescribed element
When you receive notification, you must - if you haven't already - immediately pay the difference between the prescribed element and the total award to the employee.
Recoupment and monetary awards - Arbitration
Where an award of compensation is made by an arbitrator, it will be the responsibility of the claimant to discuss any recoupment required with the SSA. For reasons of confidentiality, the arbitrator will not disclose any information directly to the SSA but will advise the claimant in writing of their obligations.
Recoupment and protective awards
If an industrial tribunal or arbitrator finds that you failed to consult workplace representatives in a collective redundancy situation, you may be required to pay a protective award to the redundant employees or those you proposed to make redundant.
Read about the redundancy consultation process.
Recoupment and protective awards - Tribunals
When an industrial tribunal makes a protective award, it will notify the SSA and advise you to send the SSA the following information:
- the name, address, and National Insurance number of each employee entitled to a payment under the award
- the date - or proposed date - of termination of employment of each employee covered by the award
You must send the information within ten days of the judgment being announced at the hearing or, if not when it was sent to the parties. If you can't meet this deadline, you must do it as soon as reasonably practicable.
The SSA will send you a recoupment notice within 21 days of receiving the above information or as soon as practicable. You must not pay any employee who has claimed or received 'state benefit' until you receive this notice.
The recoupment notice will tell you to pay a specified amount to the SSA out of the amount due under the award. This amount will be the lesser of the:
- amount due - after the deduction of any income tax and NICs - from the start of the protective award period to when you sent the SSA the necessary information
- total amount of the 'state benefit' received by an employee for any part of the same period
Once you receive notification, you must immediately pay the employees any difference between the recoupment amount and the total protective award.
If you pay an employee this amount before receiving a recoupment notice, you will still have to pay the SSA the amount specified in the notice.
Recoupment and protective awards - Arbitration
Where an arbitrator makes a protective award it will be the responsibility of the claimant to discuss any recoupment required with the SSA. For reasons of confidentiality, the arbitrator will not disclose any information directly to the SSA but will advise the claimant in writing of their obligations.
Recoupment following appeals - Tribunal decisions
If you appeal - or apply for a review - the SSA should suspend recoupment until the outcome is known.
If the SSA has already recouped and the amount of recoupable benefit is subsequently altered as a result of an appeal or review, the SSA will pay back any excess or recover a further amount as appropriate.
Recoupment following an appeal or challenge to an award made by an arbitrator
Where an appeal or a challenge is lodged in respect of an award made by an arbitrator, the claimant should notify the Social Security Agency and seek guidance from them on the timing of any recoupment that may apply.
Developed withAlso on this siteContent category
Source URL
/content/recouping-state-benefits-employment-related-tribunal-awards
Links
Getting an employment-related tribunal to review its judgment or decision
Employment-related tribunal judgments and decisions may be changed only in certain circumstances.
The following information applies only to reviews and appeals of cases that are determined by the Industrial/Fair Employment Tribunal.
To read more about appealing/challenging an arbitrator's award, read the Labour Relations Agency guide to the Arbitration Scheme. Section 9 provides further details on appealing/challenging the award.
Employment-related tribunal judgments and decisions may be changed only:
- if the tribunal decides - at the request of either side or on its own initiative - to review the judgment
- after an appeal by one of the sides involved in the judgment - see appealing against an employment-related tribunal judgment
Getting a tribunal to review a default judgment
You can apply to the tribunal to ask it to review a default judgment. A default judgment is a decision made on a tribunal claim in the absence of a response to a claim within the time limit, or not at all. If it is issued, an employer will not be able to take any further part in the proceedings dealing with the claim. You must apply in writing within 14 days of the date the judgment was sent to you by the tribunal office. Your application must state why the default judgment should be reviewed.
An employment judge may extend the time limit for reviewing a default judgment but only if they think it is just and equitable to do so.
In these circumstances, your application must include:
- your response to the claim
- an application to extend the time limit for presenting the response
- an explanation of why the tribunal did not receive a response containing the necessary information or an application to extend the time limit within the time limit for responding
The tribunal has the power to refuse to review the default judgment, confirm it, change it or revoke it.
Getting a tribunal to review other judgments and decisions
You can apply to the tribunal to ask it to review a:
- decision not to accept your response to a claim
- non-default judgment - ie a judgment other than a default judgment
You must apply in writing within 14 days of the date the judgment was sent by the tribunal office. An employment judge may extend the time limit for reviewing a judgment but only if they think it is just and equitable to do so.
The tribunal may review a decision not to accept your response to a claim if:
- it is in the interests of justice, or
- the decision was wrongly made as a result of an administrative mistake
The tribunal may review a non-default judgment only where:
- The judgment was made in the absence of one side.
- The judgment was wrongly made as a result of an administrative mistake.
- One side did not receive notice of the proceedings leading to the judgment.
- New evidence has become available since the end of the hearing to which the judgment relates, provided its existence could not have reasonably been known at that time.
- It is in the interests of justice to carry out a review. This does not mean a judgment or decision will be reviewed just because you disagree with it. Something must have gone wrong at - or in connection with - the hearing or something must have happened since the hearing which makes the judgment or decision unjust.
If you apply for a review based on new evidence, you must explain why the evidence was not available beforehand and include a full statement of the evidence which you want to introduce.
The tribunal has the power to refuse to review the judgment or decision, confirm it, change it or revoke it.
Relationship between an application for review and appeal
An application for review does not change the time limit for making an appeal to the Court of Appeal, ie you may appeal to the Court of Appeal while waiting for the result of the application - see appealing against an employment-related tribunal judgment.
You must also lodge with the Court of Appeal a copy of the application for review and, if the application has been heard and determined, a copy of the tribunal's decision on the review.
Developed withHelpAlso on this siteContent category
Source URL
/content/getting-employment-related-tribunal-review-its-judgment-or-decision
Links
Appealing against an employment-related tribunal judgment
When you can appeal against an employment-related tribunal judgment.
You may only appeal to the Court of Appeal on a point of law.
Broadly, a point of law is one that concerns the interpretation of the legislation and its application to the facts of the case.
Where an Industrial Tribunal or the Fair Employment Tribunal has made findings of fact based on the evidence it has read or heard, eg where the tribunal sets out what they believed actually happened, or why someone acted as they did, you cannot challenge this - even if you think that the tribunal was wrong to make those findings.
As well as appeals against judgments, appeals to the Court of Appeal can also be made against Interim decisions, directions or orders made by a tribunal. An appeal to the Court of Appeal may therefore be made where, for example, the tribunal has granted or refused to grant a witness order, a postponement or a deadline extension.
If you intend to take a case to the Court of Appeal you are strongly advised to seek further information and advice.
Appealing/Challenging an Award made by an arbitrator
To find out more about appealing/challenging an award, read a Labour Relations Agency guide to the Arbitration Scheme. Section 9 provides further details on appealing/challenging the award.
Developed withHelpAlso on this siteContent category
Source URL
/content/appealing-against-employment-related-tribunal-judgment
Links
Recouping state benefits from employment-related tribunal awards
In this guide:
- Outcomes of employment-related tribunal claims
- Possible outcomes from employment-related tribunal cases
- Compensation for successful employment-related tribunal claims
- Tribunal/Arbitration compensation amounts and adjustments
- Recouping state benefits from employment-related tribunal awards
- Getting an employment-related tribunal to review its judgment or decision
- Appealing against an employment-related tribunal judgment
Possible outcomes from employment-related tribunal cases
The various outcomes from an employment-related tribunal case.
You may either succeed in defending a tribunal claim or lose the claim - in whole or in part.
If you lose an unfair dismissal case, you may be ordered to comply with one of the following orders:
- Reinstatement to the old job as if the claimant had never been away, on the same terms and conditions and with back pay and benefits - eg pension rights - for the period since the dismissal.
- Re-engagement in a new job on similar terms and conditions to the old position. You may not have to pay any back pay if the employee's conduct contributed to their dismissal.
- Financial compensation, which is by far the most common outcome - see compensation for successful employment tribunal claims.
Tribunals/arbitrators will only order reinstatement or re-engagement if they believe it can actually work. If you are ordered to re-employ the employee but you do not comply, it may increase the financial compensation.
Costs and expenses
Costs can be awarded in exceptional circumstances by the Tribunal, where they consider one party has acted unreasonably in pursuing or conducting their case. For example:
- A cost award can be made to cover legal costs for parties who were legally represented at the time the case was heard.
- A preparation time award covers time spent preparing for a case for a party who isn't legally represented.
- Wasted costs orders are made directly against a paid representative on account of their own unreasonable conduct. This only applies to representatives who are acting in pursuit of profit, eg paid legal representatives.
The limit on costs that the tribunal may itself award is £10,000, but a tribunal may order costs as assessed by an officer of the County Court, in which case the limit does not apply. Parties may also agree that costs of more than £10,000 are to be paid.
Cost awards cannot be made by an arbitrator.
Developed withAlso on this siteContent category
Source URL
/content/possible-outcomes-employment-related-tribunal-cases
Links
Compensation for successful employment-related tribunal claims
The award to the claimant of financial compensation is the most common outcome of a successful tribunal claim.
The award to the claimant of financial compensation is the most common outcome of a successful tribunal claim.
Compensation in discrimination cases
There is no limit on the amount of compensation which can be awarded in cases of unlawful discrimination. Read how to prevent discrimination and value diversity.
Compensation in unfair dismissal cases
There are three types of compensation for unfair dismissal:
- basic awards
- compensatory awards
- additional awards
Basic award
The basic award depends on:
- The employee's age - counting back from the date of dismissal, they receive 1.5 weeks' pay for each year of employment after their 41st birthday, one week's pay for each year of employment after their 22nd birthday and 0.5 week's pay for each year of employment up to their 22nd birthday.
- Their length of service with you - counting back from the date of dismissal, this is capped at 20 years.
- Their weekly pay - this is subject to the statutory limit on a week's pay, which is currently £669.
Therefore:
- the maximum basic award is 1.5 x 20 = 30 weeks' pay
- the maximum amount that can be awarded is 30 x £729 = £21,870
Compensatory award
The compensatory award is based on the tribunal's/arbitrator's assessment of the employee's loss of earnings between the dismissal and the tribunal/arbitration hearing, and the likely future loss of earnings, loss of pension rights etc.
Reinstatement or re-engagement orders
If you do not comply with an order for reinstatement or re-engagement the tribunal/arbitrator can make an additional award.
The award is on top of any previous award and can be between 26 and 52 weeks' pay - although this is again subject to the £729 statutory limit on a week's pay.
Compensation in collective redundancy cases - failure to consult representatives
In a collective redundancy situation, you have a legal duty to consult with representatives of those employees affected by the proposed redundancies.
If you fail to do this, an employee or a representative may apply to a tribunal for a protective award. If the tribunal decides in their favour, it may order you to pay each affected employee up to 90 days' pay.
This payment is calculated on the basis of a week's pay. Note that if you are made to pay such an award, there is no statutory cap on a week's pay.
For more information on collective redundancy consultation, see redundancy: the options.
Compensation in business transfer cases - failure to inform and consult representatives
In business transfer situations, you must inform and consult with representatives of those employees affected by the transfer.
If you fail to do this, an employee or a representative may apply to a tribunal for compensation. If the tribunal or arbitrator decides in their favour, it may award compensation to each affected employee of up to 13 weeks' pay.
Note that for such awards, there is no statutory cap on a week's pay.
Read more on informing and consulting employees about business transfers.
Guarantee pay
If you do not require an employee to work on a day when they would normally be contractually obliged to work, you may be required to make a guarantee payment to them. Failure to pay an employee who is entitled to guarantee pay is unlawful and the employee may take you to a tribunal. If the tribunal or arbitrator finds in the employee's favour you may be ordered to pay the employee the guarantee pay.
In order to be entitled to guarantee pay, the employee must meet certain requirements. For more information on guarantee pay and to find out if your employees may be entitled to guarantee pay, see guarantee pay: employee entitlement.
Compensation in trade union-related cases
There is a separate award for cases in which the tribunal/arbitrator finds that you have made unlawful inducements to individuals in relation to their trade union membership/activities and collective bargaining.
Read more on trade union membership rights in the workplace.
Compensation in breach-of-contract cases
Where an employee makes a breach of contract claim to an industrial tribunal (or an employer makes a counterclaim), there is a maximum amount that may be awarded in respect of that claim (or of a number of claims arising from the same breach of contract).
For details of minimum and maximum amounts and how these may be adjusted, see tribunal/arbitration compensation amounts and adjustments.
Developed withAlso on this siteContent category
Source URL
/content/compensation-successful-employment-related-tribunal-claims
Links
Tribunal/Arbitration compensation amounts and adjustments
The amount of compensation awarded following a tribunal process will depend on the nature and outcome of the case.
The amount of compensation awarded following a tribunal/arbitration process will depend on the nature and outcome of the case.
The limits on certain awards and payments are varied annually according to the Retail Price Index.
Tribunal/Arbitration awards can be increased or decreased if the employer or employee unreasonably failed to follow appropriate disciplinary or grievance procedures.
An award can also be decreased where the claimant is found to have contributed to their dismissal by their actions. This is known as contributory conduct and can result in awards being reduced by up to 100%.
The arbitrator will apply the same rules as the tribunal when calculating awards.
See a table of current tribunal and arbitration compensation limits.
Adjustments to tribunal awards
A tribunal/arbitrator may increase any award made to an employee in respect of unfair dismissal by between 10% and 50% if you unreasonably failed to comply with the statutory disciplinary procedures referred to within the Labour Relations Agency (LRA) Code of Practice on Disciplinary and Grievance procedures. The tribunal/arbitrator can also reduce an award by between 10% and 50% if the employee unreasonably failed to comply with the statutory procedures.
A tribunal/arbitrator may vary any award made to an employee in respect of workplace grievances by up to 50% (either up or down) where there has been an unreasonable failure by either party to observe the good practices set out in the LRA Code of Practice on Disciplinary and Grievance procedures.
Read about the LRA Code of Practice on Disciplinary and Grievance procedures.
Interest on tribunal awards - Industrial/Fair Employment Tribunal
If you do not pay an award within 42 days of the date when the tribunal's decision is sent to the parties, you will start paying interest only on the amount of award outstanding.
In cases of unlawful discrimination judgments, interest accrues from the date the decision is sent to the parties. However, no interest is charged if you pay the award in full within 14 days.
Interest on tribunal awards - Arbitration
If you do not pay an award within 42 days of the date when the arbitrator's decision is sent to the parties, you will start paying interest only on the amount of award outstanding.
Amounts recouped by the Social Security Agency (SSA) are not included in the calculation of interest - see recouping state benefits from employment-related tribunal awards.
Failure to pay tribunal awards
If you are an employer and you fail to pay an Industrial Tribunal/Fair Employment Tribunal or Arbitrator's award made against you, enforcement action can be taken through the Enforcement of Judgments Office (EJO).
Any enforcement action will result in additional costs being incurred and these will be added to the outstanding amount due. You will have to pay these costs as well as the original award. The claimant may also be able to charge interest on the amount owed. Enforcement action through the EJO may also impact adversely on your credit rating.
Read about the Enforcement of Judgments Office.
Deductions for income tax and National Insurance
Where the employment relationship has already ceased, you do not normally have to deduct income tax and National Insurance contributions (NICs) from tribunal/arbitrator awards (these awards are generally based on net pay).
However, if:
- an award is over £30,000, income tax may be payable
- a tribunal orders reinstatement or re-engagement, you must deduct income tax and NICs from the pay for the period between the date of dismissal and the date of reinstatement or re-engagement
To find out more about your tax and NICs obligations, contact the HMRC Employer Helpline on Tel 0300 200 3200.
Developed withHelpAlso on this siteContent category
Source URL
/content/tribunalarbitration-compensation-amounts-and-adjustments
Links
Recouping state benefits from employment-related tribunal awards
About the recouping of state benefits from employment-related tribunal awards.
To prevent double payment, the Social Security Agency (SSA) can recover from you some or all of the amount of Jobseeker's Allowance, Income Related Employment, and Support Allowance and Income Support ('state benefit') it pays to an ex-worker who is then awarded compensation by an employment-related tribunal. This process is known as 'recoupment'.
Cases where the recoupment rules apply
These rules apply when a tribunal makes a monetary award for:
- unfair dismissal - including interim relief orders
- failure to make a guarantee payment
- failure to pay an individual employee a protective award
- failure to pay wages during a period of medical or maternity suspension
- compensatory awards in discrimination cases
The rules also apply to awards for failure to consult workplace representatives in collective redundancy situations, ie protective awards themselves.
Recoupment and monetary awards
If an individual receives state benefit during the period covered by a monetary award, the SSA must be repaid any benefit received during this period.
Any amount of the award that represents arrears of pay - or compensation for loss of earnings - up to the date of a tribunal is recoverable by the SSA. This part of an award is called the 'prescribed element' and is the only part of the award that can be recouped.
Recoupment and monetary awards - Tribunal
Where an award of compensation is made by a tribunal, the tribunal will identify how much of the award represents arrears of pay up to the date of the tribunal hearing (prescribed element).
You should pay the employee the difference between the prescribed element and the total award immediately.
However, you must not pay the prescribed element to the individual until you receive a recoupment notice from the SSA. If you pay the prescribed element to the individual beforehand, you will still have to pay the SSA the amount specified in the notice.
You will receive a notification from the SSA:
- where a judgment is announced at the tribunal hearing - within 21 days following the announcement or within nine days of the judgment being sent to the parties, whichever is later, or as soon as practicable after this period
- where no such announcement is made - within 21 days of the judgment being sent to the parties or as soon as practicable after this period
The recoupment notice will tell you to pay the lesser of:
- the prescribed element - after any income tax and National Insurance contributions (NICs) due have been deducted
- the total amount of state benefit received by the individual for any part of the period covered by the prescribed element
When you receive notification, you must - if you haven't already - immediately pay the difference between the prescribed element and the total award to the employee.
Recoupment and monetary awards - Arbitration
Where an award of compensation is made by an arbitrator, it will be the responsibility of the claimant to discuss any recoupment required with the SSA. For reasons of confidentiality, the arbitrator will not disclose any information directly to the SSA but will advise the claimant in writing of their obligations.
Recoupment and protective awards
If an industrial tribunal or arbitrator finds that you failed to consult workplace representatives in a collective redundancy situation, you may be required to pay a protective award to the redundant employees or those you proposed to make redundant.
Read about the redundancy consultation process.
Recoupment and protective awards - Tribunals
When an industrial tribunal makes a protective award, it will notify the SSA and advise you to send the SSA the following information:
- the name, address, and National Insurance number of each employee entitled to a payment under the award
- the date - or proposed date - of termination of employment of each employee covered by the award
You must send the information within ten days of the judgment being announced at the hearing or, if not when it was sent to the parties. If you can't meet this deadline, you must do it as soon as reasonably practicable.
The SSA will send you a recoupment notice within 21 days of receiving the above information or as soon as practicable. You must not pay any employee who has claimed or received 'state benefit' until you receive this notice.
The recoupment notice will tell you to pay a specified amount to the SSA out of the amount due under the award. This amount will be the lesser of the:
- amount due - after the deduction of any income tax and NICs - from the start of the protective award period to when you sent the SSA the necessary information
- total amount of the 'state benefit' received by an employee for any part of the same period
Once you receive notification, you must immediately pay the employees any difference between the recoupment amount and the total protective award.
If you pay an employee this amount before receiving a recoupment notice, you will still have to pay the SSA the amount specified in the notice.
Recoupment and protective awards - Arbitration
Where an arbitrator makes a protective award it will be the responsibility of the claimant to discuss any recoupment required with the SSA. For reasons of confidentiality, the arbitrator will not disclose any information directly to the SSA but will advise the claimant in writing of their obligations.
Recoupment following appeals - Tribunal decisions
If you appeal - or apply for a review - the SSA should suspend recoupment until the outcome is known.
If the SSA has already recouped and the amount of recoupable benefit is subsequently altered as a result of an appeal or review, the SSA will pay back any excess or recover a further amount as appropriate.
Recoupment following an appeal or challenge to an award made by an arbitrator
Where an appeal or a challenge is lodged in respect of an award made by an arbitrator, the claimant should notify the Social Security Agency and seek guidance from them on the timing of any recoupment that may apply.
Developed withAlso on this siteContent category
Source URL
/content/recouping-state-benefits-employment-related-tribunal-awards
Links
Getting an employment-related tribunal to review its judgment or decision
Employment-related tribunal judgments and decisions may be changed only in certain circumstances.
The following information applies only to reviews and appeals of cases that are determined by the Industrial/Fair Employment Tribunal.
To read more about appealing/challenging an arbitrator's award, read the Labour Relations Agency guide to the Arbitration Scheme. Section 9 provides further details on appealing/challenging the award.
Employment-related tribunal judgments and decisions may be changed only:
- if the tribunal decides - at the request of either side or on its own initiative - to review the judgment
- after an appeal by one of the sides involved in the judgment - see appealing against an employment-related tribunal judgment
Getting a tribunal to review a default judgment
You can apply to the tribunal to ask it to review a default judgment. A default judgment is a decision made on a tribunal claim in the absence of a response to a claim within the time limit, or not at all. If it is issued, an employer will not be able to take any further part in the proceedings dealing with the claim. You must apply in writing within 14 days of the date the judgment was sent to you by the tribunal office. Your application must state why the default judgment should be reviewed.
An employment judge may extend the time limit for reviewing a default judgment but only if they think it is just and equitable to do so.
In these circumstances, your application must include:
- your response to the claim
- an application to extend the time limit for presenting the response
- an explanation of why the tribunal did not receive a response containing the necessary information or an application to extend the time limit within the time limit for responding
The tribunal has the power to refuse to review the default judgment, confirm it, change it or revoke it.
Getting a tribunal to review other judgments and decisions
You can apply to the tribunal to ask it to review a:
- decision not to accept your response to a claim
- non-default judgment - ie a judgment other than a default judgment
You must apply in writing within 14 days of the date the judgment was sent by the tribunal office. An employment judge may extend the time limit for reviewing a judgment but only if they think it is just and equitable to do so.
The tribunal may review a decision not to accept your response to a claim if:
- it is in the interests of justice, or
- the decision was wrongly made as a result of an administrative mistake
The tribunal may review a non-default judgment only where:
- The judgment was made in the absence of one side.
- The judgment was wrongly made as a result of an administrative mistake.
- One side did not receive notice of the proceedings leading to the judgment.
- New evidence has become available since the end of the hearing to which the judgment relates, provided its existence could not have reasonably been known at that time.
- It is in the interests of justice to carry out a review. This does not mean a judgment or decision will be reviewed just because you disagree with it. Something must have gone wrong at - or in connection with - the hearing or something must have happened since the hearing which makes the judgment or decision unjust.
If you apply for a review based on new evidence, you must explain why the evidence was not available beforehand and include a full statement of the evidence which you want to introduce.
The tribunal has the power to refuse to review the judgment or decision, confirm it, change it or revoke it.
Relationship between an application for review and appeal
An application for review does not change the time limit for making an appeal to the Court of Appeal, ie you may appeal to the Court of Appeal while waiting for the result of the application - see appealing against an employment-related tribunal judgment.
You must also lodge with the Court of Appeal a copy of the application for review and, if the application has been heard and determined, a copy of the tribunal's decision on the review.
Developed withHelpAlso on this siteContent category
Source URL
/content/getting-employment-related-tribunal-review-its-judgment-or-decision
Links
Appealing against an employment-related tribunal judgment
When you can appeal against an employment-related tribunal judgment.
You may only appeal to the Court of Appeal on a point of law.
Broadly, a point of law is one that concerns the interpretation of the legislation and its application to the facts of the case.
Where an Industrial Tribunal or the Fair Employment Tribunal has made findings of fact based on the evidence it has read or heard, eg where the tribunal sets out what they believed actually happened, or why someone acted as they did, you cannot challenge this - even if you think that the tribunal was wrong to make those findings.
As well as appeals against judgments, appeals to the Court of Appeal can also be made against Interim decisions, directions or orders made by a tribunal. An appeal to the Court of Appeal may therefore be made where, for example, the tribunal has granted or refused to grant a witness order, a postponement or a deadline extension.
If you intend to take a case to the Court of Appeal you are strongly advised to seek further information and advice.
Appealing/Challenging an Award made by an arbitrator
To find out more about appealing/challenging an award, read a Labour Relations Agency guide to the Arbitration Scheme. Section 9 provides further details on appealing/challenging the award.
Developed withHelpAlso on this siteContent category
Source URL
/content/appealing-against-employment-related-tribunal-judgment
Links