UK: Supporting the Development of More Productive Workplaces?

Last Updated: 28 November 2001
Article by Sanjeet Johal

The government has introduced this Employment Bill with the objective of supporting the development of more productive workplaces in the UK by encouraging participation in the labour market through the retention and development of skills, and by improving the way that disputes are managed both at work and within the employment tribunals system. The provisions introduced in respect of maternity, paternity and adoption pay and leave are intended to encourage greater participation in the labour market and the retention of skills for parents who might otherwise leave the labour market, which will also reduce the cost of recruiting for employers. It is intended that the provisions outlined in this Employment Bill will be implemented in April 2003.

However, the Federation of Small Businesses’ reaction to the Bill has been that it will harm productivity, and that parental leave regulations are "generous to employees and hard on employers." The Small Business Council, which was set up to advise the government’s Small Business Service, although welcoming certain aspects of the Bill, has criticised the recent trend towards giving employees more rights to be away from work.

The main areas covered by the Bill are:

  1. Paternity and adoption leave and pay;
  2. Maternity leave and pay;
  3. Employment tribunal reform; and
  4. Resolving disputes between employers and employees.

1. Paternity and Adoption Leave and Pay

The Bill provides for the right to paternity leave following the birth of a child or the placement of a child for adoption, which is to be taken in a single block of either one week or two weeks at the choice of the father, although paternity leave will have to be completed within a period of 56 days beginning on the date on which the child is born or placed for adoption. Employees who are entitled to paternity leave will be required to give their employer a self-certificate of Entitlement to Leave and paternity leave will only be available to an employee who has completed a period of qualifying service, which is continuous service with the same employer for at least 26 weeks by the fifteenth week before the child is expected to be born or by the week in which an approved match (when an approved adoption agency matches an adopter with a child) with the child is made.

Adoption leave around the placement of a child for adoption is also provided for in the new Bill. Ordinary adoption leave will be for a period of up to 26 weeks and additional adoption leave will be for a further period of up to 26 weeks, giving a total of up to one year’s leave. Adoption leave will be available whether the child is being adopted within the UK or from overseas. Employees will be required to give their employer a Matching Certificate from an approved adoption agency to support their entitlement to leave and must also have completed the qualifying service period. Adoption leave will only be available to one spouse in cases where a married couple adopts a child, although paternity leave will be available to the other.

Two weeks Statutory Paternity Pay (SPP) for a single period of up to two weeks will be available, though it will only be payable for paternity leave taken within 56 days of the date on which the child is born or placed for adoption. The rate of SPP will be set in regulations, but in 2003 it will be the lesser of £100 or 90% of the employee’s average weekly earnings. It will be administered by employers in the same way as Statutory Maternity Pay (SMP), and employers will be able to recover a percentage of the amount of SPP they pay out, although in most cases this will be limited to 92% small employers who are entitled to Small Employers’ Relief will be able to claim 100% and an additional payment to compensate them for the employers’ share of national insurance contributions payable. The Bill also provides for a power to make regulations enabling employers to ask for funding, in advance if necessary, from the Inland Revenue where the amount of SPP they have to pay their employees exceeds the tax and National Insurance Contributions that they are due to pay to the Inland Revenue. In certain circumstances, which include from the first week in which an employer becomes insolvent, the Inland Revenue will be responsible for the payment of SPP.

Statutory Adoption Pay (SAP) will be available for a period of 26 weeks to employees meeting the service qualification and employers will be able to recover a percentage of the amount of SAP they pay out in the same way that SPP will be recoverable. The rate will be the same as for SPP and the same provisions are made in relation to payment and repayment by the Inland Revenue.

Although fathers and adoptive parents have been entitled to unpaid parental leave since 1999, under the current law they are not entitled to paid leave in order to care for a child. The new rights to paternity and adoption leave provided for in the Bill will be in addition to the 13 weeks parental leave provided for in the regulations made under the Employment Rights Act 1996.

2. Maternity Leave and Pay

Ordinary maternity leave is to be increased to 26 weeks, and be followed by 26 weeks additional maternity leave, giving mothers up to one year’s maternity leave. Accordingly, the payment period for maternity allowance (MA) is increased from 18 to 26 weeks. The minimum period of notice that must be given to employers for SMP will be increased from 21 days to 28 days and instead of being required to give notice of her absence from work because of her pregnancy, a woman will now be required to give her employer notice of the date she expects the liability to pay her SMP to start.

The standard rates of MA and SMP are also increased to £100 a week, or 90% of weekly earnings if this is less than £100, although the 90% of average earnings payable for the first 6 weeks without being underpinned by the flat rate will continue as before. Employers will continue to be able to recover 92% of the amount paid out by way of SMP and small employers will be able to recover all of the SMP paid out plus an additional amount in compensation for the employers’ share of national insurance contributions paid on SMP and, as with SPP and SAP, employers will also be able to apply for advance funding if the amount they are due to pay in SMP will exceed the tax, national insurance and other allowable payments due to the Inland Revenue.

The requirement that a woman must have been employed by her employer for a continuous period of 26 weeks into the fifteenth week before her expected week of confinement remains unaffected, although the requirement that she have ceased work "wholly or partly because of pregnancy or confinement" is to be omitted, allowing a woman to be entitled to SMP if her employment ends after the beginning of the fifteenth week, whatever the reason for this.

3. Tribunal Reform

At present employment tribunals are not able to include in any award an amount to reflect lost management time associated with the employment tribunal claim; have no general power to award costs against the losing party unless they have acted vexatiously, abusively, disruptively or otherwise unreasonably in either bringing or conducting the proceedings; and have no power to make an award directly against a representative where his behaviour has been found to be inappropriate.

The Employment Tribunals Act 1996 is to be amended to give the Secretary of State the power to authorise tribunals to make awards of costs directly against a party’s representative if he has conducted proceedings in an inappropriate way. The Secretary of State will also be given the power to authorise tribunals to order that one party make a payment to the other in respect of the time spent by that other party in preparing his or her case, although this will be assessed using guidelines set out in the Employment Tribunal Rules of Procedure rather than by requiring the parties to prove how much time has actually been spent.

The government wants to introduce a system that encourages conciliated settlement as early as possible without preventing last minute settlements provided there is good reason for them. One way that they propose to achieve this is by the introduction of a fixed period for conciliation which may only be extended in cases where the conciliator considers that settlement is very likely within a short additional timeframe. ACAS’s duty to conciliate cases will revert to a power to conciliate after the conciliation period has ended, which will mean that once the conciliation period is over the conciliation officer can judge whether to continue to conciliate the case or to pass it back to the Employment Tribunal Service for a time and place to be fixed for a hearing.

Employment tribunal presidents will be given the power to issue practice directions that apply countrywide in order to ensure a consistent and uniform approach to procedural issues. In order to improve the efficiency of case handling and restrict the amount of time that tribunals spend on considering obviously weak cases the rules permitting tribunals to strike out a case at the pre-hearing review have been clarified.

4. Dispute Resolution

Under current law, employment tribunals take into account the existence and use of disciplinary procedures when considering unfair dismissal cases. A failure by an employer to use procedures appropriately can result in a determination by a tribunal that a dismissal was unfair. Tribunals must also take account of the ACAS Code of Practice on Discipline and Grievance Procedures and any internal procedures the employer may have when determining the reasonableness or otherwise of the employer’s decision to dismiss. The use of internal procedures can also affect the size of an award an employee may receive when unfairly dismissed. For example, if a dismissal is found to be unfair a tribunal has the power to make a supplementary award of up to two weeks’ pay where the employer prevented the employee from appealing against dismissal under the employer’s procedure; and where an employee fails to utilise the employer’s appeal procedure the tribunal also has the power to reduce any award by up to two weeks’ pay.

Grievance procedures have no equivalent role under current law and employment tribunals do not generally take their use into account when determining complaints under their various jurisdictions. New provisions proposed by the Bill include:

  1. the setting out of statutory dismissal and disciplinary procedures (DDPs) and statutory grievance procedures (GPs);
  2. powers to make these statutory procedures an implied term of all contracts of employment;
  3. provisions to enable tribunals to vary compensatory awards by up to 50% where the employer or the applicant has failed to use the minimum statutory procedures;
  4. powers to extend, and to enable employment tribunals to extend, the time limits within which claims need to be made to allow the relevant statutory procedure to be completed before a complaint has to be presented to the tribunal;
  5. powers enabling regulations to be made preventing complaints from being presented to tribunals before part or all of the relevant statutory procedure has been completed, although the Secretary of State must consult ACAS before exercising this power;
  6. provisions which will make it unfair for employers to dismiss an employee without meeting their obligations under the relevant DDP, and which provide that an employee will receive a minimum of four weeks pay as compensation where they are found to have been unfairly dismissed and the DDP has not been complied with; and
  7. provisions which ensure that tribunals disregard any failures by an employer to take other procedural actions outside the framework of the statutory procedure if taking such additional procedural actions would have had no effect on the decision to dismiss.

The new provisions aim to encourage parties to avoid litigation by requiring all employers to have minimum internal procedures for resolving differences and by giving incentives to both employers and employees to use them.

Other Provisions:

Equal Pay Questionnaire

The "questionnaire" procedure is currently available in individuals’ disputes over matters of sex, race and disability discrimination, but not in the area of equal pay disputes. The government’s objective is to introduce the procedure into this area as the questionnaire enables the key facts to be settled early on and can encourage not only the establishment of evidence but also the settlement of cases before they proceed to tribunal.

Union Learning Representatives (ULRs)

The Bill introduces a new type of lay union representative whose main function will be to advise union members about their training, educational and developmental needs. There is currently no clear statutory entitlement for trade union members to take time off to undertake the duties of a ULR, to be trained as a ULR or to access the services of a ULR.

The Bill will provide paid time off rights to ULRs to carry out their functions and undergo any training, which are broadly equivalent to the current rights enjoyed by trade union officials under section 168 of the Trade Union and Labour Relations (Consolidation) Act 1992.

The time off requirement will be limited to activiites undertaken on behalf of fellow employees who are members of the ULR’s union and for whom the ULR has the function of acting as a ULR. However, ULRs will not be entitled to time off to provide similar services on behalf of non-union members or members of other unions.

Fixed-term employees

Currently fixed-term employees are protected by statutory employment rights in broadly the same way as permanent employees, although there are a few exceptions. However, whereas part-time workers are now protected by legislation preventing them from being less favourably treated than comparable full-time workers, no such provision currently exists in respect of fixed-term employees.

This Bill proposes to introduce a power enabling the Secretary of State to make regulations preventing less favourable treatment of fixed term employees and preventing abuse arising from the use of successive periods of fixed-term employment. It also prevents pay and pensions discrimination against those in fixed-term employment.

Partner work-focused interviews

Partners of working age benefit claimants who are themselves of working age will be required to take part in a work-focused interview at which they will be able to discuss their skills and experience and in default of which benefit sanctions will apply, although there will be no requirements beyond that of taking part in the interview.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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