• Changes to employment law in the Enterprise and Regulatory Reform Bill

    The Enterprise and Regulatory Reform Bill – which makes provision for numerous employment law reforms including mandatory pre-claim Acas conciliation, resolving more claims without a hearing and financial penalties for employers found to have breached employment rights – has received its First Reading in the House of Commons.

    Business Secretary Vince Cable, introducing the Bill, said that it 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’.

    The Bill’s employment-related measures provide for:

    • mandatory pre-claim Acas conciliation. Clause 7 inserts new provisions into the Employment Tribunals Act 1996 requiring prospective claimants to contact Acas before they can begin certain types of employment tribunal proceedings, so that parties can be offered conciliation to attempt to resolve their dispute without it reaching the tribunal system. New S.18A ETA imposes an obligation on prospective claimants to submit details of their claim to Acas, who will then try and achieve a settlement within a prescribed period. If during that time the conciliation officer concludes that a settlement is not possible, or the period expires without a settlement having been reached, the officer issues a certificate to the prospective claimant without which a claim cannot be lodged. However, the conciliation officer may continue to try and achieve a settlement of the dispute after the prescribed period has expired. Mandatory pre-claim conciliation will apply to the type of proceedings currently listed in S.18(1) ETA. However, even if it does not apply, new S.18B provides that Acas conciliation must be provided where either party requests it. Much of the detail of the early conciliation process, such as the information that must be sent to Acas and the length of the prescribed period, will be set out in regulations. Clause 8 also makes supplementary changes to limitation periods where pre-claim conciliation is used. Effectively, if a time limit for a claim expires at any time between the claim details being submitted to Acas and one month after the claimant receives the certificate from a conciliation officer, the time limit will instead be taken to have expired at the end of that period

    • a ‘rapid resolution’ scheme for some claims. Clause 10 introduces a ‘rapid resolution’ scheme for certain simple or low value tribunal claims, where the parties consent in writing to the determination of their claim by a ‘legal officer’ without the need for a hearing. Determinations under the scheme will have the same status as if they had been determined by an employment judge or a judge and lay members. The types of claim to which the rapid resolution scheme will apply are to be determined by secondary legislation. The Government considers that the use of legal officers will not breach the right to a fair trial in Article 6 of the European Convention on Human Rights, as the appointment process and terms of appointment will be designed to ensure that legal officers are independent and impartial

    • changes to EAT composition. Clause 11 makes provision for proceedings in the Employment Appeal Tribunal to be heard by a judge sitting alone. However, a judge may direct that proceedings are to be heard by a judge and two or four appointed members (with an equal number of employer- and worker-representative members) or, with the parties’ consent, a judge and one or three appointed members. The Secretary of State may by order specify that particular proceedings must be heard by a judge and a specified number of appointed members

    • a new limit on the compensatory award for unfair dismissal. Clause 12 allows the Secretary of State to amend S.124 of the Employment Rights Act 1996 to change the maximum compensatory award for unfair dismissal. The new limit could be a set amount, a certain number of weeks’ pay or the lower of the two. However, any set amount cannot be lower than the median annual earnings (as defined in the Office of National Statistic’s Annual Survey of Hours and Earnings) or higher than three times the median annual earnings. Similarly, the minimum number of weeks’ pay which can be specified is 52. Furthermore, different amounts can be specified for different kinds of employer, e.g. a lower amount could be set for small businesses

    • financial penalties for employers in breach of employment law. Clause 13 gives tribunals a discretionary power to impose financial penalties on employers where they are found to have breached a claimant’s employment rights and the tribunal considers that, in the circumstances, the employer’s behaviour in committing the breach had one or more aggravating features. What constitutes an aggravating feature is for the tribunal to decide, but the Explanatory Notes to the Bill suggest that a tribunal may be more likely to find aggravating features where the action was deliberate or committed with malice, the employer was an organisation with a dedicated human resources team, or the employer had repeatedly breached the employment right concerned. Where compensation is awarded, the penalty must be set at 50 per cent of that amount, subject to a minimum of GBP 100 and a maximum of GBP 5,000. If the employer pays the penalty within 21 days, it is reduced by 50 per cent

    • a ‘public interest’ test for whistleblowing claims. Clause 14 amends Part IVA of the ERA on public interest disclosures. It provides that, in order for a ‘whistleblowing’ claim under the ERA to succeed, a claimant must show that he or she believed that their disclosure was made in the public interest, and that their belief was reasonable in the circumstances. This amendment is directed at avoiding the effect of the EAT’s decision in Parkins v Sodexho Ltd (Brief 695) that breach of a legal obligation, one of the grounds on which a whistleblowing claim can be based, potentially covered any disclosure relating to a breach by an employer of an employee’s contract of employment

    • annual adjustment of statutory limits. Clause 15 amends S.34(3) of the Employment Relations Act 1999 so that changes to the relevant statutory limits (including the amount of a week’s pay used for statutory redundancy payments and the basic and compensatory awards for unfair dismissal) would be made on 6 April each year. All limits remain linked to the Retail Prices Index. However, the clause changes the rounding calculation so that all limits are rounded up or down to the nearest pound, and

    • ‘settlement’ agreements. Clause 16 renames compromise agreements ‘settlement agreements’ to better reflect their use and content.

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