Government Reforms

Financial Penalties for Employers – Likely Commencement Date

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Section 16 of the Enterprise and Regulatory Reform Act 2013 (“the Act”) will be implemented in April 2014 according to Jo Swinson (Minister of Employment Relations). This section, when in force, will empower Tribunals to impose financial penalties on employers where they breach a workers rights and there are “aggravating features” The penalty will be 50% of any award made with a cap of £5,000 which is reduced to half if paid within 21 days of the award being made.

Over the Summer the Department for Business, Innovation and Skills had initially said that it had “no current plans” to implement Section 16 of the Act but the Minister of Employment Relations has since said, “we plan to” implement this Section “in April 2014.”

Written by
Edward Aston
25th November 2013

The Employment Tribunal Fees Order

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As of this Monday (29th July 2013) all new claims made to an Employment Tribunal or appeals to the Employment Appeal Tribunal (EAT) will carry an issue and a hearing fee payable by the Claimant. The new legislation is ordered in The Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013

Claims have been split into two levels with each level carrying a different fee amount.

Type A Claims are more straight forward and hence carry a lesser fee and include cases such as unlawful deduction of wages, payment in lieu of notice and redundancy payments.

Type B Claims cover pretty much everything else including unfair dismissal, discrimination and Whistle blowing. The one anomaly is Equal Pay which currently sits under Type A although the MOJ has stated that ministers do intend to review this and Equal Pay may well sit under Type B in the future.

Please see below a table detailing the issue and hearing fees for each type of Claim for an individual Claimant

Issue Fee Hearing Fee
Type A £160.00 £230.00
Type B £250.00 £950.00

 

For claims made by a group of Claimants the fees will be as follows

Type A 2-10 Claimants 11-200 Claimants Over 200 Claimants
Issue Fee £320 £640 £960
Hearing Fee £460 £920 £1380

 

Type B 2-10 Claimants 11-200 Claimants Over 200 Claimants
Issue Fee £500 £1,000 £1500
Hearing Fee £1900 £3,800 £5,700

 

Claimants on low incomes or who are in receipt of certain qualifying benefits (e.g. job seekers allowance) will be able to apply for full or part fee remission details of which are detailed in Schedule three of the Order.

It is worth noting that where Claimant’s are successful in an Employment Tribunal the Employment Tribunal may make an Order for the Respondent to pay the Claimant back for the fees they have paid in addition to any other award the Tribunal will make. The current thinking is that Tribunals are likely to do this as a matter of course.

Written by
Edward ton
31st July 2013

Pre-Termination Negotiations: Implementation Date

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It was announced this week that confidential pre-termination negotiations as contained in Section 14 of Vince’s Cables Enterprise and Regulatory Reform Act 2013 will be implemented on the 29th July 2013. Follow the link to the commencement order. The new concept of “Confidential pre-termination negotiation” means that employers will now be able to have a “protected conversation” with an employee about terminating their employment under agreed terms within a “Settlement Agreement” (the new name for Compromise agreements as of 29th July) without a prior dispute being necessary.

Such conversations will be “protected conversations” and will not be able to be used by the employee in any potential tribunal proceedings. This is clearly a significant change from the previous rule of “without prejudice” which required a previous dispute to be apparent for the conversation to be protected. It is however worth noting that these new “protected conversations” will be limited to unfair dismissal claims. Automatic unfair and discrimination cases will not be covered under this sanction. A structured format will also need to be followed by the employer if they wish for their conversation to be “protected” and Acas have recently published their Code of Practice on Using Settlement Agreements to encompass the new legislation for pre-termination Negotiations. Should you require further information on the new legislation or if you intend to offer a Settlement Agreement to an employee in the future please do contact Astons for further legal advice and support.

Written Edward Aston
15th July 2013

Employee Shareholder Status enacted by Parliament

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The House of Lords has voted to accept clause 27 of the Growth and Infrastructure Bill after a further concession by the government. The Bill received Royal Assent yesterday and became the Growth and Infrastructure Act 2013. This new type of employment status is expected to be implemented by the government on 1st September 2013.

The latest concession is that the individual entering into an agreement to become an employee shareholder must, prior to entering into the contract, receive legal advice from a relevant independent advisor i.e. independent solicitor, barrister, legal executive, union official or advice centre, or the agreement will be invalid. The employer has to pay the reasonable costs of that advice, regardless of whether or not the employee accepts the position, if they would otherwise have been payable by the employee.

If the employee does not receive independent legal advice before agreeing to become an employee shareholder, they will be an ordinary employee, as the agreement will not be legally binding.

During the proposal stage a number of other concessions were made by the government, including the following:-

  • Offers of employee shareholder status must include a written statement explaining the rights that would be given up or varied and the rights attaching to the shares.
  • Those agreeing to become employee shareholders will be entitled to a seven-day cooling off period.
  • The first £2,000 of shares will be tax free.
  • Any jobseekers who refuse an offer with employee shareholder status will not forfeit their social security benefit.
  • Existing workers will be protected from detriment if they refuse to change to an employee shareholder contract.

Written by
Edward Aston 26th April 2013

What does 2013 have in store for UK Employment Law?

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The government’s Fifth Statement of New Regulation was published on 17th December 2012. It records the government’s progress in reducing the regulatory burdens on business by cutting the “red tape” and sets out the dates on which the government intends to bring into force some key employment legislation in 2013.

It is predicted that by July 2013 the total savings for businesses from this reduction in red tape will be £919 million.

The key intended dates for change include the following:-

February 2013

  • Employment tribunal award limits will rise. For instance, the limit on the amount of a week’s pay will increase from £430 to £450 and the maximum compensatory award for unfair dismissal goes up from £72,300 to £74,200.

March 2013

  • Increase in parental leave from 13 to 18 working weeks for each parent in respect of each child.
  • Removal of employer liability for harassment of employees by third parties.
  • Abolishment of discrimination questionnaires.

April 2013

  • A reduction in the redundancy consultation period for redundancies involving 100 or more employees from the current 90 days to 45 days.
  • New Employment Tribunals rules of procedure.
  • Amendments to whistle-blowing so that workers cannot bring a whistle-blowing case relating to a breach of their own contract that is not in the public interest.
  • Proposed amendments to the company law provisions on the buy back of shares to simplify the process, including for the purposes of employees’ share schemes.

Summer 2013

  • The Ministry of Justice have announced their intention to introduce employment tribunal fees in the summer of 2013. Final tribunal fee proposals include: an issue fee of £160 or £250, depending on claim; similarly, a hearing fee of £230 or £950; and an Employment Appeal Tribunal issue fee of £400 and £1200 hearing fee.
  • Tribunals will have the power to order the unsuccessful party to reimburse fees paid by the successful party.
  • A fee remission system will operate for those who meet the criteria if they cannot afford to pay.

Finally, it should be noted that other proposals for change are also in the pipeline and I will provide a further update in due course.

Written by Edward Aston 10th January 2013

George Osborne announces plans for a new Contract of Employment

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The Chancellor, George Osborne announced yesterday at the Conservative Party Conference in Birmingham his plans for a new type of employment contract. This new contract would be known as an “owner–employee” contract of employment.

Under this new contract an employee would waive their employment rights on unfair dismissal, redundancy, the right to request flexible working and time off for training. The new contract would also restrict maternity rights, requiring employees to provide 16 weeks (rather than the current 8 weeks) notice of a firm date of return to work.

In return for the surrender of these rights the company will grant the employee between £2,000 and £50,000 of shares which will be exempt from capital gains tax.

This new “owner-employee” contract is principally aimed at small companies and those anticipating fast growth but will be available to all companies no matter the size. Companies will have the option to offer this new contract to all new starters but the “owner-employee” contract will be optional for existing employees.

The Government intends for legislation to be in place later this year and that companies will be able to adopt these new contracts into their businesses by April 2013.

This radical move on employment contracts has raised a plethora of questions of how it will work in actual practice. It is also worthwhile to point out that the new contract would not prevent an employee from making any other employment law claims and in particular they would remain protected under discrimination legislation.

There are plans by the Government to consult further on this later in the month and as with all these things the devil will be in the detail.

Written by
Edward Aston
9th October 2012