UK Employment Hub 

The Department for Business, Energy and Industrial Strategy (BEIS) has launched a naming scheme for employers who fail to pay employment tribunal awards. The naming scheme was recommended in 2017 by the Taylor Review of Modern Working Practices. All tribunal awards registered with BEIS on or after 18 December 2018 and over £200 in value are in scope of the scheme. The naming scheme will run alongside the BEIS penalty scheme for unpaid tribunal awards (established in April 2016).

Penalty scheme recap

The penalty scheme allows individuals to register unpaid awards 42 days after the date of an employment tribunal judgment. Once the claim is verified by an enforcement officer, the employer will receive a warning notice stating that if they do not pay the outstanding award within 28 days, they will be sent a penalty notice. The penalty notice orders the employer to pay a penalty to the value of 50 per cent of the original award and 8 per cent interest per annum, up to a maximum of £5,000. The financial penalty is paid not to the employee but to the government.

When will an employer be named under the naming scheme?

The employee must have registered the unpaid award with both the penalty scheme and the naming scheme.

At the same time as receiving the penalty notice under the penalty scheme, the employer will receive a naming notification letter. The letter informs the employer that they will be named unless they submit valid representations within 14 days, with the requisite evidence. You can find the circumstances in which representations may be accepted by BEIS here.

If no valid representations are received within 14 days the employer will be automatically named in the next naming round along with the amount of the unpaid award. Employers should also be aware that even if they pay promptly after receiving the notification letter they may still be named. The naming rounds are in the form of quarterly press releases on the gov.uk website.

What are the implications for employers?

The new naming scheme acts as an additional incentive, on top of the penalty scheme, for employers to pay tribunal awards quickly. Employers should be warned that they will now be in double jeopardy if they do not pay the tribunal award in good time, as not only can they receive a penalty but they may also receive bad publicity.

Under regulations which came into force on 1 January 2019, UK-listed companies with more than 250 UK employees must now publish certain executive pay data in their annual reports.

The new regulations are part of the government’s efforts to improve transparency and accountability in corporate governance, and are a response to criticism that companies should justify executive salaries.

Quoted companies with more than 250 UK employees must provide the following in their directors’ remuneration report:

• the ratio of their CEO’s total remuneration to the median (50th), 25th and 75th percentile full-time equivalent remuneration of their UK employees; and
• supporting information, including the reasons for changes in ratios from year to year and, in the case of the median ratio, whether, and if so how, the company believes this ratio is consistent with the company’s wider policies on employee pay, reward and progression.

All companies subject to the new regulations are also required to illustrate in the directors’ remuneration report how the growth in the company’s future share price impacts executive pay, and to provide a summary of any discretion that has been exercised on executive remuneration outcomes reported that year in respect of share price appreciation or depreciation during the relevant performance periods.

The new requirements will apply for annual reports produced for financial years starting on or after 1 January 2019. The requirement for companies to illustrate the impact of share price increases will apply to all new remuneration policies introduced on or after 1 January 2019.

Companies affected by the new regulations should ensure that they fully understand what is required of the new regulations, and should begin the process of identifying the data that will be needed to provide the information required by the regulations. It will also be important to consider how the information will be explained and communicated by the business, both externally and to the workforce.