There has been a great deal of press coverage recently about changes in employment law. Some of the changes are merely proposals and some have come into force. The exact status of proposals can be quite confusing and therefore we thought this would be a good point at which to summarise recent and proposed changes.

Recap: What’s happened so far in 2012

Qualifying Service Period for Unfair Dismissal

Probably the most significant change in employment law that has already come into force this year is the increase to the qualifying service period for unfair dismissal. An employee who started working for a new employer on or after 6 April 2012 now normally needs to accrue two years’ continuous employment before having the right to bring a claim for unfair dismissal. Those employees who commenced work before 6 April 2012 will be unaffected.

Employment Tribunal Reform

For cases heard from 6 April 2012:

Judges sitting alone

Instead of having three Tribunal panel members – an Employment Judge and two lay members – now unfair dismissal claims can be heard by an Employment Judge sitting alone.

Deposits and costs awards increased

There has been a general trend to making life more difficult for people taking Employment Tribunal claims.

Deposit orders – where an employment judge decides that either party’s arguments have “little reasonable prospect of success” the judge can order the party to pay a deposit to the Tribunal as a condition of continuing to take part in the proceedings. If the party then wins this claim, the deposit is refundable; if they lose, the judge may make an order for costs which can be set off against the deposit.

The maximum deposit a tribunal can order a party to pay if their claim has little reasonable prospect of success has increased from £500 to £1,000.

The maximum amount of costs an employment tribunal can award (without referring the case to the county court for detailed assessment) increased from £10,000 to £20,000.

Witness expenses

Witness expenses will no longer be paid by the State; instead a Tribunal may order that witness expenses can be borne by the losing party.

From October 2012

Pensions Auto enrolment

New laws coming into force on 1 October 2012 will require all employers in the UK to automatically enrol eligible jobholders into a pension scheme. The new duties will be formally implemented over four years starting on 1 October 2012, with larger employers being affected before smaller employers and new businesses. For details of the implementation timetable, see http://www.thepensionsregulator.gov.uk/employers/staging-date-timeline.aspx

National minimum wage

The national minimum wage rates have changed with effect from 1 October 2012.

The standard adult rate (workers aged 21 and over) has increased to £6.19 per hour (up 1.8% from £6.08). The development rate (workers aged between 18 and 20) will stay at £4.98 per hour.

The young workers rate (workers aged under 18 but above the compulsory school age who are not apprentices) will stay at £3.68 per hour.

Still to come

Enterprise and Regulatory Reform Bill (not yet in force):

What’s in the Bill?

• Early ACAS conciliation – claimants in Tribunal claims will have to give details of the dispute to ACAS first; there will then be a one month pre claim conciliation period where ACAS will try to negotiate settlement of the claim.
• Financial penalties for employers – employers could be fined an additional sum on top of any damages if they lose – at the moment this would be between £100 and £5,000. This will not be an automatic award, and will be reduced by 50% if the employer pays within 21 days.
• Unfair dismissal compensatory award – the Bill allows the government to vary the statutory limit on the compensatory award in unfair dismissal claims. At present, it seems that the limit may be either between £25,882 and £77,646 or 12 months’ of the Claimant’s pay. These amounts are still under consultation.
• Settlement agreements – compromise agreements will be re-named “settlement agreements” in all legislation using that term. It seems that there will be very little real change to these agreements. ACAS have been asked to produce a new code of practice for such situations.
• Protected Conversations – a very narrow concept of protected conversations is in the Bill. Originally the idea was that wide ranging “off the record” conversations about an employee’s performance or issues at work could be discussed frankly with an employee without the employer having to fear that these conversations could be brought up at Tribunal. However, this idea was fraught with difficulties, and the government is instead proposing introducing protection solely to conversations around negotiating an employee’s exit and their termination package. This would only apply in unfair dismissal proceedings, and only where it is not alleged that the dismissal was automatically unfair. There are further exceptions, for example the conversations may not be confidential if anything that was said in the conversations was, in the Tribunal’s opinion “improper, or was connected with improper behaviour.” If implemented, this concept of protected conversations” will no doubt develop through extensive case law, and we would encourage employers to tread carefully until the full details of any protection becomes clear.

Tribunal Fees

The government has stated that from summer 2013, claimants will have to pay fees to bring Tribunal claims. They will have to pay two fees – one on issuing the claim, and one on proceeding to hearing. Respondents will also have to pay fees if they bring a counter claim. There are also plans to bring in fees for making applications to the Tribunal (including applications for judicial mediation, setting aside a default judgment and applications to dismiss a claim). Tribunal judges will have the power to order the unsuccessful party to reimburse fees paid by the successful party, although this will not be automatic. As in the civil courts, where Claimants can prove that they cannot afford to pay any or part of the fees, they may be entitled to a full or partial fee remission.

For claimants bringing a Tribunal claim, there will be two levels of fees. For individual claimants, simpler cases (such as claims for unpaid wages or a redundancy payment) will cost £160 to issue the claim and £230 to go to Tribunal, whereas more complex cases (such as unfair dismissal or discrimination) will cost £250 to issue the claim and £950 for the hearing. Judicial mediation is set to cost £600 and will be payable by the employer.

Under Consultation:

Equality Act 2010

Questionnaires

The Equality Act 2010 introduced “Prohibited Conduct Questionnaires” or “Discrimination Questionnaires” which are questionnaires that an individual who is considering or who has brought a discrimination claim can serve on the person or organisation that the individual believes may have discriminated against them (usually the individual’s employer or former employer). The questionnaires often contain a long list of questions asking for detailed factual information about the employer’s workforce, such as the number of people employed by the employer who have a disability, or who are of a particular ethnic origin, or who have brought grievances etc.

Many employers consider that these questionnaires are too onerous, time consuming and expensive to deal with, and believe that they are often used as “fishing” expeditions by claimants i.e. an individual just trying to find a source of grievance. The government is consulting on repealing the right to serve these questionnaires.

Recommendations

The government is consulting on taking away the Tribunal’s recently acquired power to make wide recommendations to an employer in discrimination cases, beyond those which directly affect the claimant.

Third Party Harassment Protection

Removing the very specific third party harassment protection under the Equality Act 2010 is also under consultation – the government argues that employees would still be protected under other legislation, so there would be little real change here.

TUPE

Reforming TUPE –

At present the government is considering:

1. Whether liability for transferring employees should pass entirely to the transferee (as at present) or whether liability should be held jointly and severally by the transferee and the transferor (meaning that a transferring employee could potentially sue and claim damages from either the transferee, the transferor or both).
2. Whether the “service provision change” provisions should be retained or repealed. These provisions refer to whether TUPE applies where a contract to perform services has been reassigned (e.g. where a service which has been performed “in house” is outsourced).
3. Whether employee liability information should be provided earlier to the transferee.
4. A dismissal for a reason connected with a transfer of a business under TUPE will be an automatically unfair dismissal unless the employer can show that the dismissal took place for an economic, technical or organisational reason entailing changes in the workplace (an “ETO reason”). There is no statutory definition of an ETO reason, but it must be concerned with the day to day running of the business. The government is consulting on whether an amendment to TUPE would be possible to ensure that a change of location of the workplace would constitute an ETO reason.

Family Friendly Proposals

Under consultation are:

• Unpaid leave for fathers to attend antenatal appointments
• An 18-week period of maternity leave for mothers, followed by a new 34-week period of shared parental leave.
• The right to request flexible working to be extended to all employees with 26-weeks’ continuous employment.

Annual leave

At present, whilst European law provides that workers must have at least 4 weeks’ paid annual leave, in the UK, workers are entitled to 5.6 weeks’ paid annual leave per year. The government is considering allowing employees to be paid in lieu of taking 1.6 weeks’ of their annual leave entitlement, rather than taking it as holiday. The remaining 4 weeks would still have to be taken as holiday and could not be “bought out” except on termination of employment.

Where there is a genuine overriding business need (this is to be defined by government guidance), employers could require employees to carry over up to 1.6 weeks leave entitlement per year into the following holiday year.

Collective Redundancy

Also under consultation are changes to the collective redundancy consultation process:

• Collective redundancy consultation periods to be reduced.
• The introduction of a new non-statutory code of practice to address key issues.

Shareholding Employees and Waiver of Employment Rights

George Osborne announced on Monday 8 October plans for a different type of employment contract, for “owner-employees” who would apparently trade in some of their employment rights for shares in the employer’s business (exempt from capital gains tax). The intention is that these “owner-employees” would give up their UK rights on unfair dismissal, redundancy, the right to request flexible working and time off for training, and would be required to provide 16 weeks’ notice of a firm date of return from maternity leave, instead of the usual 8. These proposals will be subject to a consultation period; it will be interesting to see what makes it into law. It would probably be impossible for these “owner-employees” to opt out of most employment rights (e.g. discrimination, Working Time Regulations 1998) as these rights principally come from European legislation.

Abandoned Proposals

The government will not be taking forward the proposed no fault dismissals. Instead they are working with ACAS on updating the guidance to the ACAS code, particularly for small businesses.

Scully Twiss’ Recommendations:

• Check when the new pensions regulations will start to affect your business here http://www.thepensionsregulator.gov.uk/employers/staging-date-timeline.aspx
• If the annual leave changes are implemented, consider reviewing your company’s annual leave policies
• Make sure you thoroughly review your new employees’ performance before they reach 51 weeks’ service (if they started before 6 April 2012) or 1 year and 50 weeks’ service if they started on or after 6 April 2012
• If you employ anyone based on the national minimum wage check that you are complying with the new limits

We shall provide further information on the above topics in future newsletters.

This newsletter is for general guidance only and should not be treated as a definitive guide or be regarded as legal advice.