UK: UK Legislative Reform - No Summer Break

The sun may have finally decided to make an appearance but this is no indication of a relaxing summer break for employment specialists!

A number of key employment law provisions came into force on 25 June 2013, with 29 July 2013 as the next key date for legislative reform. We take a look at what employment-related legislative changes are in store this summer.

25 June 2013 – legislative changes under the ERRA 2013

25 June 2013 was a significant date for employment reform, with a number of provisions of the Enterprise and Regulatory Reform Act 2013 (the "ERRA") being brought into force. 

Whistleblowing changes:

The most widely published changes were perhaps those relating to whistleblowing.

From 25 June 2013, disclosures must now be made "in the public interest" to qualify for protection under the whistleblowing framework. The likely benefit for employers is that workers will not be able to 'play the whistleblowing card' in normal unfair dismissal cases (circumventing the minimum continuous service requirements and potentially resulting in uncapped compensation) simply because they have raised a complaint, for example, about an alleged breach of their own employment contract. 

Further, a disclosure no longer needs to have been made in good faith to qualify for protection (although workers who make disclosures without good faith face a reduction in any compensation awarded). 

And (having originally indicated that such provision would not come into force until later this summer), on 25 June 2013 the government also introduced a new concept of vicarious liability in relation to whistleblowing: now, where an individual is subjected to detriment by a co-worker thanks to their 'blowing the whistle', such detriment can be treated as also being done by the employer, regardless of whether the employer approved or even knew about such detriment. A good opportunity for employers to get their whistleblowing policies into shape!

Other changes:

In other legislative changes in June 2013, employees no longer have to have acquired two years' continuous service before being able to bring a claim for unfair dismissal, where their dismissal was related to their political opinion or affiliation. 

And the concept of 'caste discrimination' has also been introduced. No need to rush out and amend existing equal opportunities policies just yet, however – the changes simply allow the government to easily amend existing legislation to prohibit discrimination on the grounds of caste in the future, and we have no indication when this might be.

29 July 2013 – more legislative changes

29 July 2013 is the next date for your diaries as regards legislative reforms. 

Employment Tribunal Fees

Firstly, on that date, the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013 will come into force, bringing with it significant changes for the way in which Tribunals operate. 

For the first time, Claimants will have to pay fees to have their claims accepted and heard by the Employment Tribunals, as we explained in our recent blog. The exact fee level will depend on the claim, and those on low incomes may make applications for fees to be reduced or disapplied, but Claimants can expect to pay between £310 and £1200 for their claim to be lodged and heard. 

We wonder if this will have the desired effect of limiting the number of unmeritorious claims being brought against Respondents, or whether it will simply mean Claimants will be less inclined to settle and more likely to want 'their day in court' given that they will have paid for it. 

The fee structure will come into force for all claims commenced on or after 29 July 2013. Watch out therefore for an unseasonably high increase in claims over the next few weeks, as Claimants try and avoid the fees!

Employment Tribunal Rules of Procedure 2013

On 29 July 2013 the Employment Tribunal Rules of Procedure 2013 (the "new Rules") shall also come into force. Unlike the introduction of fees (which only apply to new claims), the new Rules will apply to all existing and new claims.

The aim of the new Rules is to simplify Tribunal procedures, with a focus on: proportionality, speed and efficiency, simplicity, and certainty and consistency. Key changes include:

  • More straightforward ET1 and ET3 forms;
  • An early power for Tribunals to reject ET1s if the claims appear to be an abuse of process or the Tribunals have no jurisdiction to hear them.
  • An opportunity for Respondents to apply for extensions to the deadline to submit a response even after that deadline has passed, with no automatic default judgment being issued if a response has not been received on time;
  • Introduction of a "sift" stage once the claim has been accepted – whereby the Employment Judge will consider whether the claim or response have any reasonable prospects of success and whether the Tribunal has jurisdiction to hear the claim. If not, the claim or response can be struck out (in whole or in part) at this stage;
  • Case Management Discussions (CMDs) and Pre-Hearing Reviews (PHRs) will be replaced with one single preliminary hearing where procedural and substantive preliminary matters can be addressed;
  • A new "reconsideration procedure", whereby judgments can be reconsidered at the request of either party or on the Tribunal's own initiative;
  • Greater powers for Employment Judges to run final hearings as they see fit, including setting strict timetables limiting the length of witness evidence;
  • Judges will be able to consider all costs applications, even those above £20,000 (which currently have to be sent to the County Court for assessment);
  • Greater scope for restricted reporting orders and hearings in private.

We do hope that these new provisions will have the desired effect of increasing speed and efficiency, but fear that – instead of seeing a quicker turnaround of claims – there will be a rise in satellite legislation as Claimants seek to challenge, for example, decisions made at sift stage, or rejection of claims on the grounds of 'abuse of process'. It remains to be seen how robust Employment Judges will be in applying these new powers. 

It also remains to be seen what impact the new sift process will have on costs awards. Will parties find it more difficult to argue that the claim (or response) had no reasonable prospects of success (and therefore should merit a costs award), given that it made it through the sift process?

Pre-termination negotiations

Settlement discussions will be subject to increased confidentiality from 29 July 2013, when a new section 111A of the Employment Rights Act 1996 will mean that parties will be unable to use"pre-termination negotiations" as evidence in ordinary unfair dismissal cases (unless there are allegations of 'improper behaviour').  A final draft statutory code and template negotiation letters, intended to provide practical guidance for such negotiations, are awaited. 

It is intended that this enhanced 'without prejudice' rule will assist parties in agreeing settlements and avoiding Tribunal claims, and will make it easier for employers to offer settlement as an alternative to outright dismissal. Surely a good thing for employers, but be aware that this is not a 'free reign' to constructively dismiss or discriminate against your employees under the camouflage of 'pre-termination negotiations'.   

New cap on unfair dismissal compensation

Also from 29 July 2013, a new cap on the compensatory award for unfair dismissal claims will be introduced. Any dismissals made from that date onwards which are found to be unfair will be subject to a cap on any compensatory award of £74,200, or 52 weeks' pay, whichever is the lower. You can refer to our recent blog for further details, where we consider how such cap might affect employers' staffing proposals over the next few weeks.

And finally...

As if employment specialists didn't have enough changes to get their heads around, a change in vocabulary is also on the cards. "Compromise agreements" and "compromise contracts" are no more: from 29 July 2013 such agreements shall be known as "settlement agreements". Make sure this is reflected in your compromise settlement agreements from the end of July onwards!

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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