Data obtained from the Department for Business, Energy and Industrial Strategy by People Management under a freedom of information (FOI) request has revealed that in 2017, 56 awards worth £394,505 went unpaid because of insolvency. Over the longer period for which BEIS holds records, between April 2016 and June 2018, a total of 96 awards worth £720,346 went unpaid because of insolvency. However, the actual figure could be higher as BEIS only becomes aware of unpaid tribunal awards when told about them by the person they were due to be paid to.
Although no details of the companies involved were disclosed, the figures indicated that ‘phoenixing’ – where company owners make their business insolvent to avoid paying tribunal awards or other penalties, only to set up a new, almost identical company shortly afterwards – could be on the rise.
Using anecdotal evidence, Croners’ commented that whilst there will be very many genuine insolvency situations when tribunal awards go unpaid, there is the possibility that ‘phoenixing’ is contributing to that number, with employers intentionally circumventing the system. The problem has also been recognise by the Director of Labour Market Enforcement Sir David Metcalf who has called for further work to be done to tackle this problem.
