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29th June 2014

Small Business, Enterprise and Employment Bill Published

On 25 June 2014, the Small Business, Enterprise and Employment Bill was published. The government has stated that the purpose of the bill is to “remove the barriers” that small businesses face in the current economic climate, in an attempt to build a stronger economy going forward and help small businesses to grow and compete.

 From the employment perspective, the government has suggested that it intends that the bill will increase the efficiency of the employment tribunal system and further reduce the burden of employment law upon small businesses.

A summary of the key employment related provisions is set out below:

Financial penalties for failing to pay tribunal and settlement awards

The bill creates a new system for enforcing the payment of tribunal and settlement awards. Under this new system, a financial penalty can be imposed upon employers who fail to pay compensation awards ordered by an employment tribunal or settlement payments due under a settlement that has been reached following ACAS conciliation. Under the proposed system, where it is considered that an employer has failed to pay an award, the employer shall be given a 28 day warning notice which shall remind the employer that the payment is unpaid and warn them that a financial penalty may be imposed if it is not paid by a certain date. If the employer does not make the payment by the date given in the warning notice, a penalty notice shall be sent which will require the employer to pay a financial penalty of 50% of the unpaid compensation or settlement award (subject to a minimum of £100 and a maximum of £5,000). It is useful to note that under the new regime, an employer will not be considered as having failed to pay a compensation award, if the employer has appealed or is still within the time limit for appealing against the decision.

Postponement of tribunal hearings

New provisions shall be introduced which allow a limit to be placed upon the number of applications that a party can make to postpone employment tribunal hearings. Further under the new rules, if a party makes a late application to postpone or adjourn a hearing, the tribunal will have the power to make a costs order against them in respect of the costs incurred as a result of that late application.

Increased penalties for failure to comply with NMW

The maximum financial penalty for failure to comply with national minimum wage requirements shall be increased to £20,000 per worker.

Zero hours contracts

Zero hours contracts are not currently defined by legislation, however, following concerns about the use of these contracts, it is proposed that going forward amendments will be made to the Employment Rights Act which shall define zero-hours contracts and also ban the use of exclusivity clauses in such contracts.

Public Sector termination payments

The bill makes provisions for public sector employees and office holders to repay 'exit payments', such as redundancy payments, if they are re-employed in the public sector with a certain time frame.

The government has stated that the aim of the bill is to help small businesses to grow and compete but it is difficult to see how the employment reforms detailed above will improve things for small businesses as the majority of the reforms simply place more restrictions on employers. In any event, the bill will now make its way through Parliament and so at this stage we do not know when it is intended that these provisions will come into force.

If you would like more information on the issues covered in this article, please contact Gemma Hill on 01604 463309 or gemmahill@hewitsons.com

For more information regarding our employment services please click here.

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