The Enterprise and Regulatory Reform Bill

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The Enterprise and Regulatory Reform Bill was presented to Parliament on 23rd May. The key employment law reforms under the Bill are listed below:

Mandatory Acas Pre Conciliation:

Prospective claimants will be required to contact Acas before they initiate certain types of employment tribunal proceedings. This is intended to help both parties come to a resolution before the dispute enters into the tribunal system.

Introduction of Legal Officers:

Low value or simple tribunal claims will enter into a “rapid resolution” system whereby if both parties give written authority, the claim will be heard by a legal officer without the need for a hearing.

EAT hearings to be heard by a single judge:

Employment Appeal Tribunals (EAT) will be heard by a sole judge unless ordered otherwise.

New Limits on Unfair Dismissal Compensatory Award:

Currently the maximum award for unfair dismissal is £72,300 although in practice awards for these claims are usually much lower. The new bill provides that the Secretary of State will be given the power to limit unfair dismissal compensatory awards to a set amount, such as one year’s earnings or a set number of weeks pay. However, any set amount would not be able to be lower than the national medium earnings (currently circa £26,000 per annum) or higher than three times the national medium earnings. It is currently unclear whether all businesses will have the same set amounts allocated or if for example, lower thresholds may be set for smaller enterprises.

Financial Penalties for employers:

The tribunal will be able to impose penalties on employers who breech a claimant’s employment rights and whose behaviour is said to have had an “aggravating feature.” This “aggravating feature” is not currently defined but suggests intentional disregard or actions carried out with specific malice. Where a compensatory award is made to a claimant, the employer would have a penalty imposed of 50% of the award given with the ability to reduce the amount by 50% if paid within 21 days. The financial penalty would be subject to a minimum of £100 and a maximum of £5,000.

Compromise Agreements to be renamed:

The Government believes that by renaming “Compromise Agreements” to “Settlement Agreements” will “more accurately describe an agreement that is about delivering a satisfactory solution for all parties.”

Whistleblowing claims:

Definition of “qualifying disclosure” in Whistleblowing legislation will be limited to disclosures “in the public interest.”

The majority of the employment law reforms will come as no surprise to employers although the proposals surrounding the cap around unfair dismissal have not been previously suggested. It reflects a clear attempt to try and lower the awards nearer the higher end of the current cap and will surely be welcomed by employers. The Bill in its entirety appears to be a commitment from the Government to cut the cost of doing business and eradicate red tape. The Bill will be subject to a second reading in Parliament on 11th June 2012, the Bill could be subject to amendments as it goes through the Parliamentary process.

Written by

Edward Aston