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23rd June 2012

Enterprise and Regulatory Reform Act 2013

This legislation is planning to bring a large number of changes to employment law.

We thought it would be useful to provide a summary of where we are at the moment, in terms of what to expect and when in various key areas. The following is the timetable as we currently know in these areas:-

1. Unfair Dismissal: Political opinions or beliefs

With effect from 25 June 2013, there will be no qualifying period for unfair dismissal protection where a dismissal has been because of the employee’s political opinion/belief or affiliation.

2. Whistleblowing

There are various changes being made to the whistleblowing legislation, which apply with effect from 25 June 2013. These include the following:

  • There is to be a “public interest” test. This means that qualifying disclosures will only be “valid” if the worker reasonably believes disclosure is in the public interest. The aim (or at least one of the aims) is to try to reverse the current case law that an employee simply raising a grievance regarding their own contract of employment may be regarded as having made a qualifying disclosure for whistleblowing purposes. Note that this does not apply to disclosures before 25 June 2013.
  • Removal of the “good faith” requirement for a protected disclosure. For disclosures on or after 25 June, there is no longer a need for an employee to show that they have made the disclosure/whistleblown in good faith – but their compensation may be reduced if the disclosure was not made in good faith.
  • Employees may be personally liable for any detriment caused by them to whistleblowers, and employers will be liable for the acts of their employees– again, this applies where the disclosures are made on or after 25 June 2013.

3. Unfair Dismissal Compensatory Award

With effect from 25 June 2013, the Secretary of State is given the power to vary the statutory cap on the compensatory award in unfair dismissal claims. The variation to the cap will be brought into force by the Unfair Dismissal (Variation of the Limit of Compensatory Award) Order 2013. This Order has been placed before Parliament in draft and, if approved, will set the new compensatory award limit as the lower of (i) the current cap of £74,200 or (ii) 1 year’s gross pay for the particular employee.

Although the Secretary of State is given this power on 25 June, the new limits will not come into force on that date, but they are expected to come into force in July 2013.

Note also that, rather than the usual increases in the various limits being made on 1 February of each year, future revisions to the limits will take effect on 6 April each year.

4. Pre-Termination Negotiations

At some point in the summer of 2013, it is expected that the ability to have pre-termination conversations with employees regarding, in essence, a package to leave, and which will be regarded as confidential and inadmissible in Tribunal proceedings in unfair dismissal claims, will come into force.

At the same time, Compromise Agreements will be renamed as “Settlement Agreements”.

ACAS has already published its Code of Practice relating to pre-termination conversations. See the following link to the ACAS website:

http://www.acas.org.uk/media/pdf/n/o/Acas-response-to-Settlement-Agreements-Code-June-2013.pdf

5. Fees in the Employment Tribunals

New Employment Tribunal fees are expected to be introduced on 29 July 2013. A Claimant will need to pay two fees. The first fee will be paid when they start the Tribunal proceedings. The second fee will be payable around 4 to 6 weeks before the full Tribunal hearing.

For a “straight forward” unfair dismissal claim, the fee for starting a claim is likely to be £250, whereas the hearing fee is likely to be £950.

There will be a fee remission scheme designed to ensure access to justice for Claimants who cannot afford the fees.

6. Financial Penalties for employers who lose at Tribunal

It is intended that Tribunals will have the power to order an employer to pay a fine of up £5,000 if they lose an Employment Tribunal claim. It is not absolutely clear when this will come into force, but (subject to confirmation) the current thinking is that it will apply to claims which are started on or after 25 October 2013 (or after the date the relevant section of the legislation comes into force, if that is later).

7. ACAS Mandatory Conciliation

From 6 April 2014, it is expected that the requirement for Claimants to contact ACAS in order to discuss early conciliation before they start Tribunal proceedings will come into force.

8. Discrimination Questionnaires

It is expected that from 6 April 2014, the statutory discrimination questionnaires will be abolished.

These are the most significant proposed changes to affect employers. There are all sorts of other different changes, for example to the Employment Tribunal Rules of Procedure, but these are in our view the most significant at this stage for employers to be aware of.

For further information, contact Gemma Hill on 01604 233233 or click here to email Gemma.

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