Enterprise and Regulatory Reform Bill
Several employment law reforms have been proposed by the Government in its Enterprise and Regulatory Reform Bill. The Bill had its second reading in the House of Commons on 11th June 2012. The Bill will now have to go through a further stage of the House of Common’s Committee and may be subject to further amendment.
The Government is still considering the proposal to introduce a no-fault dismissal scheme for small businesses and has not yet published its final proposals regarding charging fees in the Tribunal. There are also proposals to re-write the Tribunal rule book as well as the law on TUPE and collective redundancies. We’ll keep you updated about this.
Before then, we summarise what the Bill proposes so far and the impact of these proposals. The Government has said that they will “improve our employment tribunals” and “scrap unnecessary red tape and help ensure that people who work hard and do the right thing are rewarded.”
Financial penalties for employers in breach of employment law. Tribunals could award fines against employers who breach employee’s rights – of as little as £500 up to a maximum of £5,000 – if there are aggravating circumstances eg. where the act was deliberate or committed with malice, the employer had an HR department, or the employer had repeatedly breached the employment right concerned.
Mandatory pre-claim ACAS conciliation. Claimants would be required to contact ACAS (the Advisory, Conciliation and Arbitration Service) with details regarding their claim before they could then be allowed to bring a claim in the Tribunal. This proposal is to attempt to settle claims without them having to go to the Tribunal. ACAS would then be given time to attempt to settle the claim between the parties. If this was not achieved, the claimant could issue their claim in the Tribunal. ACAS would then still be able to continue to attempt to settle the claim from that point onwards. Currently ACAS often only tries to settle claims between the parties once a claim has been issued. The impact of this proposal is that it may cause more claims to be settled without the need to go to the Tribunal, although it may extend the length of cases if conciliation is not successful. It could also put an additional strain on ACAS’ resources.
“Settlement agreements”. Compromise Agreement to be simplified with standard wording and by re-naming “Settlement Agreements”. This is unlikely to affect how Compromise Agreements currently work in practice. We don’t really know yet what the differences will be between current Compromise Agreements and the new Settlement Agreements.
A new limit on the compensatory award for unfair dismissal. The maximum compensatory award for unfair dismissal is proposed to be changed to either a fixed sum or, alternatively, a fixed number of week’s pay, whichever is less. The amount could also be different for smaller and larger employers.
Annual adjustment of statutory limits. In line with previous years, statutory limits (eg. the amount of a week’s pay which is used for calculating statutory redundancy payments and the basic and compensatory awards in unfair dismissal cases) is proposed to be made on 6th April each year.
A ‘public interest’ test for whistleblowing claims. In order for a “whistleblowing” claim to succeed, a claimant would have to show that he believed that their disclosure was made in the public interest, and that their belief was reasonable in the circumstances – and not just any disclosure relating to a breach by an employer of an employee’s contract of employment.
Changes to Employment Appeal Tribunal (EAT) composition. As has already been proposed and implemented in unfair dismissal cases in the Tribunal, this proposal proposes the same for unfair dismissal cases in the EAT to be heard by a judge sitting alone without members. This would remove the positive impact such members can have on proceedings and deliberations, although it may save money.
A ‘rapid resolution’ scheme for some claims. If both sides agree, in less complex or lower value claims, the claim could be heard by a “legal officer”, instead of a Tribunal judge and without a Tribunal hearing. This may expedite Tribunal proceedings, but it may make a “second tier” of Tribunal justice.
“Protected conversations.” These are intended to enable employers and employees to talk about any concerns that they have without fearing that such discussions will be used against them in any subsequent litigation. It’s proposed that this will apply to unfair dismissal claims only and not discrimination, breach of contract claims or any “automatic” unfair dismissal claims such as whistleblowing, for example. Nor is it to apply “to anything said or done which in the tribunal’s opinion was improper, or was connected with improper behaviour.” It’s unclear whether the new rules will apply to constructive dismissal claims where, as is often the case, there is also a breach of contract claim as part of the same proceedings. It has already been proposed that this proposal will not apply to discrimination claims which often form part of the same proceedings in unfair dismissal claims.