UK: Busy Running A Business? Read Only What You Need To Know About This Summer’s Employment Law Developments

Summary and implications

Do you ever wonder if, instead of focusing on running your business, you spend your life catching up with bureaucracy and endless new government and legislative initiatives? Do you have the time (or inclination) to read and understand the 40 or so new employment provisions due to come into force this year? If your answer is a resounding "no", read on.

Having trawled through these new laws, we see some method in the madness. Below we summarise very briefly what they mean to you.

The crux of the changes is to give with one hand and take with the other. Employees get new rights but lower compensation. Employers get the comfort of tribunal fees but a slap in the form of extra penalties if they "misbehave". So, what do you need to know, what can you ignore and what should you do next?

  • Make sure your staff know the standard of behaviour you expect of them. This makes good business sense regardless of the Government's initiatives. Bear in mind that as of 25 June 2013 employees will be able to complain of unfair dismissal related to their political opinions and affiliation and, in the near future, will be able to pursue whistleblowing claims against colleagues and, vicariously, your business. Now may be the time to refresh memories as to what is acceptable and explain the new legal requirements.
  • Review your strategic view on dispute resolution, bearing in mind the imminent introduction of tribunal fees and pre-claim conciliation procedures.
  • Consider how you can take advantage of other business-friendly measures, including the new employee shareholder status and the portable disclosure and barring service – "DBS" (which has replaced "CRB" checks).

Reminding employees of how they should behave can save you a fortune (and needn't cost much either)

As the range of employee rights (and, therefore, potential claims) increases, communicate to staff your expectations. You can do that in writing, using e-learning modules, or face-to-face. Although the upper limit of the compensatory award for unfair dismissal is set to be capped, it is best not to face a claim in the first place.

1. Keep politics out of the workplace but don't dismiss simply because certain political opinions/affiliations are "unacceptable"

As of 25 June 2013, employees will be able to complain that they have been dismissed unfairly because of their political opinions or affiliations. This will be a "day-one" right, so the normal minimum qualifying period for bringing unfair dismissal will not apply. However, dismissal will not be automatically unfair and may be justified on substantive grounds (e.g. that the individual was seeking to spread their views in the workplace) where a fair disciplinary policy is followed.

Remind staff to keep politics out of the workplace and explain to managers the nature of the new protection (e.g. employees may not be dismissed simply for membership of the BNP, but may be dismissed if they seek to impose or apply their views at work provided a fair procedure is applied). You may want to amend your handbook and disciplinary/conduct policies.

2. Whistleblowing – minimise the risk of claims due to retribution by colleagues

Whistleblowing claims are attractive to employees (and their advisers) for two reasons: the minimum qualifying period does not apply and there is no cap on the compensatory award. This is not going to change and, in fact, from sometime this summer employees who subject a colleague to a detriment because he/she made a protected disclosure may be at the receiving end of a claim. They may land you in hot water too – through the concept of vicarious liability. Update your policies, procedures and communication so that staff know that retaliation against whistleblowers is unacceptable. Monitor compliance and keep records to help you establish a defence if you end up facing a tribunal claim. Employers will have a defence if they can show that they have taken all reasonable steps to prevent the retaliation.

You will be relieved to know that the new laws redefine the scope of protected disclosures. By making it a requirement that disclosures must be "in the public interest" the Government hopes to minimise complaints of breach of contract masquerading as whistleblowing.

Whistleblowing compensation

Under the new legislation, compensation may be reduced by up to 25 per cent if the disclosure is not made in good faith (e.g. to extract revenge).

3. A lower cap on the compensatory award – make sure it works for you

In an attempt to encourage out-of-court settlements, through managing claimants' expectations, the Government is expected this summer to cap the compensatory award for unfair dismissal at the lower of the current rate (£74,200) and an employee's one year's pay (excluding pension contributions, benefits in kind and discretionary bonuses).

Admittedly, this may lead some claimants to try to recover higher compensation through "creative" discrimination and whistleblowing claims.

Caste discrimination

Within 12 to 24 months UK legislation will outlaw caste discrimination, as a strand of race discrimination.

Thou shall settle out of court – the carrot and the stick

1. Tribunal fees may deter some claimants, but otherwise could make litigation and settlements more expensive

Perhaps the most significant development, to take effect on 29 July, is the introduction of compulsory tribunal and EAT fees.

In the tribunal, two fee levels will operate, depending on the type of claim an employee pursues. Fees will be payable in two stages: on issue of a claim and before the hearing. A claim will only proceed or continue if fees are paid or, in appropriate circumstances, remission is granted (see the box below). However, time limits for lodging a claim will not be extended, e.g. to allow a claimant to get his/her funds in order. If an employee brings more than one type of claim, a single fee will apply, at the highest rate applicable. The cost of lodging an appeal with the EAT will be £400 and the EAT hearing fee currently stands at £1,200.

By way of an example, an employee who pursues an unlawful deduction of wages claim will have to pay £160 when issuing the claim (serving an ET1) and £250 as a hearing fee, approximately four to six weeks before the full tribunal hearing. If the same employee was to pursue an unfair dismissal or discrimination claim, the issue fee will rise to £230 and the hearing fee will be set at £950.

The fees will apply to all tribunal claims and EAT appeals which are lodged on or after 29 July 2013). This is something you should bear in mind if you are currently conducting disciplinary or similar proceedings.

The fee remission system – when claimants do not have to pay fees

Alongside the new tribunal fee regime, the Government is planning to introduce a fee-remission system, which will allow some claimants to only pay a portion of the fees, or no fees at all.

The remission system, currently still under consultation, will require an individual to pass two distinct tests relating to their and their partner's disposable capital (e.g. savings and shares) and income. As a result of the disposable capital test, not every individual in receipt of income-related state benefits will automatically be excused from paying the fees in part or in full.

So, what do the changes mean to you?

  • Some employees may think twice before issuing a claim. There is an argument, however, that once a claimant has paid the fees, he/she may be more reluctant to settle without a hearing.
  • Tribunals can order the losing party to pay the winner's fees. This should be factored into any risk assessment and settlement negotiations.
  • Preliminary applications, to allow claimants to proceed with a claim that is brought out of time due to fee-related issues (e.g. a claimant failed to raise funds in time) may increase and result in additional costs, until tribunals clarify their approach to such arguments.

2. Pre-claim conciliation – choose your battles

From April next year, prospective parties to employment litigation will be offered the chance to resolve their dispute before it reaches the tribunal, using the ACAS pre-claim conciliation service. In brief:

  • Before issuing the claim form, a prospective claimant will have to submit his/her details to ACAS, which will then offer the parties to engage in pre-claim conciliation. Time for bringing a claim will be extended by up to one month.
  • The parties are not obliged to engage in conciliation, in which case the claimant is free to issue the ET1 and time will run as usual.
  • If the parties engage in conciliation, but it is unsuccessful, the claimant may proceed to issue the claim form.

3. If you lose a case, you may have to pay a limited additional penalty

Much has been made of the new power for tribunals to impose an additional penalty on employer, equal to up to 50 per cent of the award made to the employee or £5,000, whichever is lowest. The award is payable to the secretary of state, not the employee.

This penalty will only be ordered if the case has "aggravating features" – a concept that is yet to be explained or defined – and will be reduced by 50 per cent if paid within 21 days. This is a potential additional cost, but given the cap of £5,000 it will rarely cause employers to settle claims they would otherwise fight. This new power is expected to come into force in April 2014.

Negotiating an exit

Many an HR director spoke to us in frustration about managers' lack of understanding of the "without prejudice" principle. We fully sympathise and expect to hear more on the issue once the new law on "pre-termination negotiations" is in place (probably this summer).

In brief, certain exit discussions will not be disclosable in tribunal, but only in relation to "normal" unfair dismissal claims. By and large, we recommend a very cautious approach and take the view that this new proposal has many potential pitfalls for employers.

Take advantage of whatever sweeteners are on offer

Find out as much as you can about the pros and cons of the new employee shareholder status – don't believe everything you read in the press. In the right environment the new status can:

  • remove the risk of a range of claims (e.g. "normal" unfair dismissal and statutory redundancy pay); and
  • increase morale, productivity and engagement (achieved through share ownership and a greater sense of personal responsibility).

Remember also that the Disclosure and Barring Service's new "update service" will be launched on 17 June. Under this service, individuals will be able to register once for a DBS check which will then be automatically updated and available for you to check free of charge.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.