Introduction
In the April 2012 edition of Employment Highlights, we outlined details of various upcoming changes to employment law. Since then there have been further developments with regard to these changes including the publication of the Enterprise and Regulatory Reform Bill (the Bill) on 23 May.
The Bill covers a number of areas of legislative reform including competition, directors’ remuneration, copyright and employment. The provisions of the Bill on directors’ remuneration and enhanced shareholding voting rights are the subject of a separate Norton Rose Briefing. In this edition of Highlights, we consider the key employment aspects of the Bill.
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The early conciliation of claims by Acas
As referred to in the April edition of Highlights, last November, the Government set out its intention to require potential tribunal claims to be lodged first with Acas to encourage conciliation before a tribunal claim can be presented. Provisions implementing this requirement are now set out in clause 7 of the Bill which outlines the following procedure:
- Before lodging a claim, a prospective claimant in relevant proceedings (which includes discrimination, unfair dismissal and redundancy) must send certain information to Acas. This is likely to be on a prescribed form along the lines of a simplified ET1.
- An Acas officer must try to promote a settlement within a certain period of time which is to be prescribed. (This period is likely to be one month).
- If during the time period the officer considers that settlement cannot be reached or the time period expires, the officer will issue a certificate to the prospective claimant who can then bring his claim. He will not be able to bring his claim without the certificate.
The Bill also makes provision for the extension of time limits for bringing claims to allow for the additional time necessary for this conciliation process.
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Rapid resolution scheme
In its response to the consultation, Resolving workplace disputes, the Government proposed the introduction of a “rapid resolution” scheme for determining more straightforward claims without the need for a hearing. Clause 10 of the Bill is intended to support the introduction of this scheme and amends the Employment Tribunals Act 1996 to allow someone appointed as a “legal officer” to determine certain proceedings (yet to be prescribed) with all of the parties’ consent. There is no further information at present as to who may be appointed a “legal officer” for these purposes.
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Unfair dismissal compensatory award
Currently in ordinary unfair dismissal cases, the amount of any compensatory award made is subject to the statutory cap of £72,300 which increases annually at a rate slightly in excess of the increase in the Retail Prices Index.
Clause 12 of the Bill will allow the Secretary of State to vary the statutory limit of the compensatory award in unfair dismissal cases. The limit will be either a specified amount which is no less than the average national annual earnings and no more than three times this sum; a specified number of weeks’ of an individual’s pay (which is to be no less than 52); or the lower of these two amounts.
If it goes ahead, it is likely that this change will result in a lower statutory cap than the current cap of £72,300.
The new limit could be set at different rates for different businesses. The Explanatory Notes to the Bill suggest that this may mean a lower amount for smaller businesses. One area of concern is that a reduced cap on compensation would lead to more discrimination claims being filed, for which there is no cap on compensation.
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The introduction of financial penalties for employers
Last November the Government set out its proposals for introducing a system of financial penalties for employers found by the tribunal to have breached an individual’s employment rights. These proposals are now set out in clause 13 of the Bill.
The new provisions will not apply to claims presented within six months of the Bill becoming law. Otherwise a tribunal can order an employer who loses a tribunal claim to pay a financial penalty to the Secretary of State where the employer’s breach has “one or more aggravating features”.
It is not clear what will amount to an “aggravating feature” but the Explanatory Notes to the Bill suggest that it will be up to the tribunal whether to impose the penalty, taking into account factors such as the size of the employer; the duration of the breach of the employment right; and the behaviour of the employer and the employee. Interestingly, the Explanatory Notes also indicate that an employment tribunal may be more likely to find that the employer’s breach has aggravating features where the action was deliberate or committed with malice, where the employer had a dedicated human resources team, or where the employer had repeatedly breached the employment right concerned.
The amount of any penalty will be between a minimum of £100 and a maximum of £5,000 and should be equal to 50 per cent of any financial award made to the claimant. However, a penalty may be imposed even where no financial award has been made. If the employer pays within 21 days, the penalty will be reduced by 50 per cent.
Concern has been expressed by some employers that, although this penalty will be at the discretion of the tribunal, it will be used tactically by employees to encourage a settlement.
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Whistleblowing
As mentioned in last month’s employment video, clause 14 of the Bill makes certain amendments to the whistleblowing provisions of the Employment Rights Act 1996 (ERA).
In summary, currently there is no requirement that a qualifying disclosure be made in the public interest, so that workers who blow the whistle about breaches of their own employment contract are protected.
Clause 14 of the Bill addresses this “loophole” by amending the ERA so that qualifying disclosures must, in the reasonable belief of the worker, be made “in the public interest”.
For more details of the law on whistleblowing, please refer to our June employment video.
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Changes to compromise agreements
As promised last November, clause 16 of the Bill will implement the change to rename compromise agreements “settlement agreements”. A further consultation on other changes to the newly named settlement agreements is expected this summer.
In the meantime, a new clause has been tabled at the committee stage of the Bill with regard to settlement agreement offers which appears to be the awaited proposal on “protected conversations” as detailed below.
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The introduction of “protected conversations”
As outlined in the April edition of Highlights, last November the Government stated that it intended to consult on the introduction of the concept of “protected conversations” which could allow employers to discuss issues such as retirement or poor performance with staff without this being raised in subsequent tribunal proceedings.
As mentioned above, at the committee stage of the Bill, an amendment has been tabled by the Government which effectively introduces the concept of protected conversations. The proposed wording means that for the purposes of any ordinary unfair dismissal proceedings, the tribunal will not be able to take into account evidence of any offer made or discussion held with an employee with a view to terminating the employee’s employment on agreed terms.
The provision will not apply to claims of automatic unfair dismissal or any other claims such as discrimination or breach of contract. In addition, it will not apply on the issue of costs if the employer’s settlement offer is made reserving the right to refer to it on the question of costs. It will also have limited application if anything said or done during the course of such discussions is considered “improper”. It remains to be seen how this will be interpreted if the clause remains as drafted.
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The introduction of compensated no-fault dismissals
In the April edition of Highlights we reported that in March 2012 the Government had issued a call for evidence on “compensated no-fault dismissals” for firms with ten or fewer employees. Since then it has been confirmed that this concept will not be included in the Bill and it is understood that the idea has been abandoned.
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Conclusion
The committee stage of the Bill is due to come to a close this month and its provisions may of course be subject to change before it is passed. We will of course keep you informed of further developments but, in the meantime, if you have any questions or want any further advice on any area covered, please contact us.
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