UK: The New Employment Act - How Will it Affect You? When Will it Affect You?

Last Updated: 20 August 2002

Article by Paul Newdick


On 8th July 2002, the Employment Bill received Royal Assent and is now the Employment Act 2002 ("the Act").

The Act represents a wide ranging package. Principally it is concerned with three main issues, namely, working parents (maternity, paternity and adoptive leave and pay), dispute resolution in the work place and improving the skills of employees.

An additional clause on flexible working was introduced as the original Bill passed through Committee Stage in Parliament towards the end of January this year.

The Act itself essentially amounts to a piece of enabling legislation. Employers, employees and advisers alike are going to have to wait for the publication of the many regulations that section after section of the Act refers to before they know what the precise nature of the new rights and obligations will be. That said, the Act does go into considerable detail as to what the regulations should cover.

The DTI have just published an implementation timetable for the Act. Given that the majority of regulations are not likely to become law until April 2003 at the earliest though, the hope is that there will be sufficient time to get to grips with them before they come into force.

The Main Provisions of the Act

The Act provides that all employers, regardless of size, are to operate minimum standard compulsory disciplinary and grievance procedures. Employees are to be encouraged to raise grievances with their employers before applying to the Employment Tribunal. Limited extensions of time limits for lodging a Tribunal complaint are to be provided to allow the relevant procedures to be completed. Variation to Tribunal awards is also to be introduced to "encourage" the use of the new minimum procedures.

The Act also enables regulations to be made to provide for the following:

  • 6 months’ paid and a further six months’ unpaid maternity leave;
  • 6 months’ paid and a further six months’ unpaid leave for adoptive parents;
  • two weeks’ paid paternity leave for working fathers;
  • an increase in the standard rate Statutory Maternity Pay from £75 per week to £100 per week;
  • reimbursement of maternity, paternity and adoptive payments by employers from the Government (small employers to receive a full 100% reimbursement plus a further compensation payment on top);
  • improvements to Employment Tribunal procedures;
  • introduction of Equal Pay Act questionnaire;
  • introduction of Union Learning Representatives, including a right to paid time off work for said Representatives; and
  • empowerment for the Secretary of State to introduce regulations protecting fixed-term workers.


Dispute Resolution

The provisions in the Act provide for the following:-

  • A new contractual term implementing statutory minimum standards in disciplinary and grievance procedures is to be automatically implied by Statute into all contracts of employment (with no exemption for small employers). Details of these procedures are contained in Schedule 2 of the Act.
  • Employees are required to exhaust internal grievance procedure arrangements before bringing particular types of claims before the Tribunal. The employee will have to set out his or her grievance in writing and send a copy to their employer. There will then follow a 28 day cooling off period to allow attempts to be made to resolve the issue in dispute.
  • If there is a breach of the procedures the Tribunal will be prevented from considering any proceedings, but only if either:
  • the breach is apparent to the Tribunal from the information supplied to it by the employee in relation to bringing the proceedings; or
  • the Tribunal is satisfied the breach has arisen from the employer raising the issue of compliance with the provisions.
  • Provision is also included to allow appropriate adjustment to time limits for commencement of proceedings to allow the relevant statutory disciplinary and grievance procedures to be complied with.
  • Tribunals will also have power to increase or reduce compensatory awards by up to 50% if an employer or employee does not use the statutory disciplinary/dismissal or grievance procedures.

An employer who has failed to use the proper procedures will be able to use the defence of "it wouldn’t have made any difference anyway", provided the minimum standards set out in the Act are met and the dismissal is otherwise fair. It remains to be seen however as to how Tribunals will interpret this provision in practice and therefore employers should continue to follow appropriate disciplinary practice at all times.

Small employers are also no longer to be exempt from having to give details of disciplinary and grievance procedures.

Consultation on these provisions is to take place over the winter with introduction expected late next year. ACAS has been invited to revise its code on disciplinary and grievance procedures. Guidance will be provided by collaboration between ACAS, the Small Business Service (SBS) and other advisory groups.

Paternity and Maternity Leave

Regulations are to be made under the Act to provide for a minimum of 2 weeks’ paid paternity leave within 56 days of birth for working fathers. Similarly, leave provisions will also be available for one of two adoptive parents, with the other adoptive parent eligible for the more extensive "ordinary or additional adoption leave" highlighted below. It has been suggested that a minimum qualifying period of employment will be required for entitlement to this leave – probably 41 weeks before the birth or adoption.

There will be statutory paternity pay to cover paternity leave along the same lines as Statutory Maternity Pay ("SMP") under the proposed regulations. Statutory paternity pay will be offset against any contractual entitlement of the employee.

"Ordinary adoption leave" and "additional adoption leave" reflecting existing maternity leave rights are also to be introduced under the new regulations. Statutory adoption pay to cover such leave will again operate along similar lines to SMP. Again, statutory adoption pay will be offset against any contractual entitlement of the employee. Employers will be able to recover statutory adoption pay, offsetting against social security contributions in the same way and to the same extent as they can recover SMP.

Regarding statutory maternity leave and pay, the minimum entitlement to ordinary maternity leave is to be increased from 18 to 26 weeks and the right to SMP extended to the same period. The existing recovery provisions for larger employees are to be widened to enable recovery to be made from monies due to the Inland Revenue in a way to be set up under the proposed regulations. Recovery by small employers though will continue to be set off against National Insurance contributions.

Draft regulations have been published and consultation has now been completed. At the time of writing, final regulations are expected to be operational from April 2003.

Tribunal Reform

The Act provides for amendments to the Employment Tribunals Act 1996 to enable regulations to be made to provide for the following:-

  • the extension of the powers of the Employment Tribunals and the Employment Appeal Tribunals to award costs;
  • Tribunals to have powers to postpone hearings to facilitate conciliation;
  • the President of the Employment Tribunals to have formal powers to issue practice directions;
  • extending the power of Tribunals to strike out unmeritorious cases at a pre-hearing review;
  • facilitating determination of disputes without a formal hearing; and
  • standardisation of forms

Consultation is expected to take place this winter with the introduction of a package of measures planned for next year.


The Act was to remove the existing limitation on compromise agreements so that such agreements could be entered into in full and final settlement of all possible complaints an employee may have rather than in relation to a particular complaint or complaints. This provision though did not survive the passing of the Bill through the House of Lords, and is not in the Act.

Other provisions which did survive though include:-

  • The introduction of an Equal Pay questionnaire in Employment Tribunals. This will follow the format of the questionnaire procedures already available in other discrimination cases. This is expected to lead to a large increase in equal pay claims.

Regulations are to be made before the end of 2002, to be implemented early in 2003.

  • The introduction of a statutory right to a reasonable amount of paid time off work for Union Learning Representatives to carry out their functions. Dismissal of a Union Learning Representative because he or she asserts this right is to be added to the list of automatically unfair dismissals.

The Department for Education & Skills is currently working with ACAS on a draft code. These provisions are not expected to take effect before 2003.

  • The Act provides for regulations to be made not only to implement the EC Fixed Term Work Directive but also to make it unlawful to pay fixed-term workers less than others (including making occupational pensions schemes available to them if comparable permanent employees are eligible for membership).

The Fixed Term Employees’ (Prevention of Less Favourable Treatment) Regulations 2002 come into force on 1st October 2002. Guidance is expected shortly.

  • As mentioned above, a new clause was introduced at Committee stage at the end of January 2002 implementing proposals to give working parents with young children the right to request flexible working time arrangements which must be seriously considered by their employers. A qualifying employee will be able to exercise the right to require flexible working arrangements to enable him or her to care for someone who, at the time of the application, is a child aged under 6 years (or, if disabled, under 18).

The precise definition of a "qualifying employee" will be set out in the proposed regulations along with what is meant by "flexible working arrangements".

An employee may apply to his or her employer for a change in:-

    1. the hours they are required to work;
    2. the times they are required to work;
    3. where, as between their home and place of business, they are required to work.

Regulations may also specify other terms and conditions of employment an employee may request be changed.

The procedure for making an application and how an employer must deal with it are to be set out in the proposed regulations.

Employers will be able to refuse requests where they have a clear business reason.

Consultation on the draft Flexible Working (Eligibility, Complaints & Remedies) Regulations 2002 and the draft Flexible Working (Procedural Requirements) Regulations 2002 is underway and concludes on 10th October this year. These Regulations are expected to take effect from April 2003.


The Employment Act 2002 introduces some far-reaching changes to implement the Government’s Family Friendly Policies and to redirect and streamline cases coming before the Employment Tribunals. Whilst the detailed Regulations governing these changes are still awaited and implementation will not take place until next year, employers are advised to start planning for these changes now, as structural changes to employment and pay policies and practices may be needed.

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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