Employment law reforms: April 2012 government plans confirmed, new proposals and calls for evidence
The last month has seen a raft of government proposals for changes to employment laws. Details were included in a speech made by the Business Secretary Vince Cable on 23 November, BIS's Response to the Resolving Workplace Disputes consultation, and the Chancellor's Autumn Statement.
Changes confirmed for April 2012
- The qualifying period for unfair dismissal is to increase from one year to two years. The BIS response alludes to the issue of whether this change could be challenged as discriminatory (eg, on grounds of sex or age). It states that, in BIS's view, there will be a degree of disparate impact on different groups but this will not be "considerable". In any event, it considers that the change will be justified as a proportionate means of achieving a legitimate aim (of improving business confidence to recruit and retain staff). It remains to be seen whether BIS has sufficient evidence to support this claim.
- The maximum deposit order a tribunal can make if a party wishes to proceed with a weak case is to increase from £500 to £1,000.
- The maximum costs that can be awarded by a tribunal without detailed assessment is to increase from £10,000 to £20,000.
- Witness statements are to be taken as read unless the tribunal judge directs otherwise.
- Witness expenses will no longer be state-funded. The tribunal will have power to direct parties to pay witness costs and order the losing party to reimburse the successful party for these costs.
- Unfair dismissal cases and all EAT appeals are to be heard by judge alone unless the judge directs that lay members should also sit.
Changes confirmed but with no date set
- Claimants will be required to submit details of their complaint to Acas (on a new form, shorter than the ET1) and will then be offered pre-claim conciliation for up to one month (with a possible two week extension). Acas will have a duty to conciliate if requested by the parties both before and post claim. The need for additional funding for Acas is apparently to be met through savings to be achieved by the reduction in the number of tribunal proceedings.
- The government will pilot the creation of regional mediation networks by providing mediation training to individuals from local SMEs, and will also explore how to promote mediation in the retail sector as a pilot for other sectors.
- Section 147 Equality Act 2010 is to be amended to clarify that discrimination complaints can validly be waived through statutory compromise agreements (which are also to be renamed "settlement agreements" in all relevant legislation).
- The original proposal for penalties (payable to the Exchequer) to be imposed on employers found to have breached employment rights is to be adopted in an amended form. The cap of £5,000 remains, but penalties will no longer be automatic. Instead judges will have the discretion to impose a penalty where the employer's breach has aggravating features (eg, unreasonable behaviour such as negligence or malice).
- Annual increases to the maximum tribunal awards and statutory redundancy payments will continue to be linked to RPI, but will be rounded to the nearest pound rather than £10/100.
- The government is to make CRB checks portable and provide an immediate checking service for employers via an online facility available from 2013.
- The government is considering providing a model text settlement agreement and amending the relevant statutory provisions to enable existing and future claims (except latent personal injury claims) to be effectively waived without the need to list them individually. This should reduce the complexity and cost of settlement agreements. Proposals will be subject to consultation.
- The government will consult on proposals to allow employers and employees to engage in "protected conversations" which cannot be referred to in subsequent tribunal proceedings, without there needing to be a pre-existing formal dispute (as is required for "without prejudice" protection).
- The government is developing a proposal to create a rapid resolution scheme for low value straightforward claims, possibly by non-judges and on paper. This will be subject to public consultation in due course.
- A consultation on tribunal fees is expected to commence shortly. Proposals include an issue and listing fee, higher fees for those claiming more than £30,000, and losing employers to reimburse fees. Originally it was suggested that fees might be introduced from April 2013, but subsequent announcements suggest that December 2013 is more likely.
- The government will consult in Spring 2012 on streamlining the regulation of the recruitment sector.
- The government is due to report back on the Red Tape Challenge spotlight on employment law in Spring 2012, although Vince Cable has stated that 40% of the 159 regulations considered are to be merged, simplified or scrapped. It has also yet to consult on its proposal to remove the third party harassment provisions from the Equality Act 2010.
- The government has not yet issued its response to the consultation which closed in August 2011 on proposed changes to family-related leave, flexible work, statutory holiday and a tribunal power to order equal pay audits. Vince Cable's speech did confirm an intention to go ahead with the extension of the right to request flexible work to all employees and to modernise new parents' rights.
Calls for evidence
The government has announced that it is seeking views on:
- "compensated no-fault dismissals" for micro-employers (with 10 or fewer employees)
- slimming down dismissal processes, potentially including changes to the Acas Code of Practice on Disciplinary and Grievance Procedures.
It has issued documents calling for evidence by 31 January 2012 on:
- the effectiveness of TUPE and in particular the provisions covering service provision change, post-transfer harmonisation, transfers from insolvent companies, and the inter-relationship between TUPE consultation obligations and collective redundancy consultation
- collective redundancy consultation, including whether a statutory definition of "establishment" would be helpful and whether the minimum period for consultation where 100 or more dismissals are proposed should be reduced from 90 days, possibly to 60, 45 or 30 days.
The evidence is to be used to formulate policy proposals which will then be put forward for public consultation in 2012.
Other legislation under review
- Mr Justice Underhill is to lead a fundamental review of the employment tribunal rules of procedure, with the aim of producing revised rules by the end of April 2012. The review will include a consideration of whether legal officers can be used instead of judges for certain tasks. In parallel with the review, the government is to develop a new form for claimants to set out a statement of loss and the procedural guidance provided by tribunals is to be reviewed. BIS has decided not to proceed with the idea of allowing "Calderbank" settlement offers with costs consequences if an offer is not beaten at tribunal, although this may be reconsidered if other reforms fail to deliver the hoped-for reduction in tribunal hearings.
- The government is to consider proposals to reform workplace sickness absence suggested in a report by Dame Carol Black and David Frost published on 22 November 2011. Their proposals include creating a new Independent Assessment Service to assess an employee who has been absent for more than four weeks, amending fit notes so that they advise on an employee's ability to work generally and not just in their existing job, and a job-brokering service to enable employees off sick for 20 weeks to look for jobs elsewhere.
- The government has proposed amending whistleblowing law so that it does not apply where an employee is simply complaining about breaches of their own employment contract. This would be a very positive step for employers.
- The "paperwork obligations" of the Agency Worker Regulations are to be reviewed in 18 months' time.
- The 17 sets of national minimum wage regulations are to be simplified.
Statutory holiday: ECJ confirms limit on carry-over; EAT rules no right to pay unless take or request time off
The ECJ has confirmed that Member States can lawfully require carried over statutory holiday to be taken within the following 15 months or else be extinguished, agreeing with the opinion of its Advocate-General issued in the summer (KHS v Schulte, ECJ). Employers must hope that the Government chooses to use this option when amending the Working Time Regulations following its recent consultation on changes to reflect case law developments.
Meanwhile, the EAT continues to issue conflicting rulings on whether an employee is only entitled to statutory holiday pay if they take holiday or give notice that they wish to do so. In 2004 the EAT in Canada Life v Gray suggested that the right to pay in lieu on termination was preserved even if the right to take holiday had been extinguished at the end of each holiday year. In NHS Leeds v Larner the EAT recently ruled that statutory holiday entitlement can be carried over to the following holiday year (notwithstanding that this conflicts with the express provisions of the relevant regulations) where an employee has been off sick for the entire holiday year. It can then be paid in lieu on termination even if the employee failed to request holiday during the relevant year or expressly request that it be carried over.
This month the EAT has taken the opposite view, ruling that employees are only entitled to holiday pay if they seek to exercise their right to take leave by giving notice, or at least request that it be carried over if unable to take leave due to sickness. The EAT also rejected the employee's argument that her employer had an obligation to inform her of the need to exercise her rights in this way. (Fraser v South West London St George's Mental Health Trust, EAT)
Hopefully the Court of Appeal will provide clearer guidance when it hears the appeal in Larner early next year.
Equal pay: out of time tribunal claims can proceed in the High Court
A Court of Appeal ruling means that employers may face equal pay claims brought in the High Court as a breach of contract claim even though a tribunal claim would be out of time.
Equal pay claims can be brought either in the employment tribunal (subject to a six month time limit) or as a contract claim in the courts for breach of the implied contractual equality clause (where the limitation period is normally six years).
The Court of Appeal has upheld a High Court decision that claimants who fail to present a tribunal claim for equal pay within the time limit can bring a claim in the High Court. The Court's discretion to strike out an equal pay claim where it could be more conveniently disposed of in the employment tribunal should not be exercised where the tribunal claim would be out of time. The Court disagreed with the High Court's decision in Ashby.
The employer is reported to be considering applying for permission to appeal. (Birmingham City Council v Abdulla, CA)