A number of changes to employment law are expected in coming months, with two Bills being approved just days before Parliament is dissolved in anticipation of the general election. 

The Small Business, Enterprise and Employment Act (SBEEA) includes provisions relating to zero hours contracts; public sector exit payments; restricting applications to postpone Tribunal hearings; fines for non-payment of Tribunal awards; increased fines for non payment of the national minimum wage; equal pay and whistleblowing. The Deregulation Act will remove employment tribunals’ ability to make wider recommendations in discrimination cases and simplify apprenticeships in England and Wales. Brief details of the changes are set out below. 

Apart from the increased fines for non payment of the minimum wage and the reduction in tribunals’ powers to make recommendations, all of the changes will need to be fleshed out by further regulations. The impact will, therefore, be limited unless and until the next government takes action.

Zero hours contracts (ZHC)

SBEEA is the vehicle for the Government’s ban on exclusivity clauses and seeks to prevent employers relying on a contractual clause that prohibits a zero hours worker from working for someone else. However, the Government is concerned that some employers may circumvent the ban and has drafted accompanying regulations which add a new protection from detriment for ZHC workers on the grounds that they worked elsewhere. In addition, the regulations propose extending the exclusivity ban to employment and worker contracts which guarantee a low income (the income threshold is yet to be decided). 

What happens next depends on the outcome of the election. While the coalition parties support the SBEEA provision on ZHCs and draft regulations outlined above, Labour is committed to going further: for example, giving ZHC workers the right to a fixed hours contract where they work ‘regular’ hours.

Public sector exit payments

SBEEA is also the vehicle for legislation aimed at enabling certain public bodies to recover redundancy and other exit payments from highly paid employees who return to work in the same part of the public sector within a short period of leaving. Some UK public sector bodies already have arrangements in place to recover exit payments from returning employees. Many others will welcome the ability to recoup costs in this way. Again further regulations will be required before these provisions will take effect.

Restricting applications to postpone ET hearings

SBEEA will enable regulations to be introduced to amend the Employment Tribunal Rules of Procedure to limit the number of postponements requested by a party. The Government has already consulted on draft regulations which provide that parties will usually be limited to two postponement requests in any case. Any further request, or an application made less than seven days before the hearing or at the hearing itself, will be granted only in exceptional circumstances, whereupon the tribunal will be obliged to consider making a costs (or preparation time) order against the applicant. There will be exemptions where a tribunal considers that postponement is desirable to facilitate settlement, or where the need for a postponement is due to an act or omission by the tribunal or another party to the claim.

Fines for non-payment of ET awards

SBEEA introduces a scheme for penalising employers who fail to pay tribunal awards or settlement sums. Following a warning notice from an enforcement officer, a financial penalty will be imposed unless the relevant sum is paid by a specified date. The financial penalty will be 50% of the unpaid relevant sum subject to a minimum of £100 and a maximum of £5,000. However, if, within 14 days of the penalty notice, the employer pays both the unpaid relevant sum and the penalty, the amount of the penalty will be reduced by 50%.

Reduction in tribunal powers to make recommendations

When an employment tribunal upholds a discrimination claim, it can, at present, make recommendations as to steps the respondent should take to reduce the adverse effect of discrimination on any person. The Deregulation Act will limit this power so that tribunals will only be able to make recommendations aimed at reducing the effect of the discrimination on the claimant him or herself. We are expecting the Government to act quickly to bring this part of the Deregulation Act into force with effect from 6 April 2015.

Increased fines for non-payment of minimum wage (NMW)

The National Minimum Wage Act 1998 will be amended by SBEEA to allow for the maximum £20,000 penalty for non-payment to apply in respect of each worker who has not been paid the NMW. Currently, the maximum penalty applies per notice, irrespective of the number of underpaid workers. Given cross-party support for stronger enforcement of the minimum wage, this change is expected to be implemented following the election.

Gender pay reporting

The Equality Act 2010 will be amended by SBEEA to require the new, post-election, government to introduce new regulations, by the end of March 2016, that will require larger employers in the private and third sector to publish details of their gender pay gap ie the difference in pay between male and female employees. The new rules will not apply to organisations with fewer than 250 employees, nor to most public authorities. The detail of the new requirements, including precisely what will need to be reported and where, will be determined by the new government after the election and following a public consultation. 

Many employers will be concerned that highlighting pay differences in this way could leave them exposed to equal pay claims or damage their reputation for fair treatment. However, a failure to comply with the new rules could cause even greater reputational damage. Default is also likely to be treated as a criminal offence, for which the penalty will be a fine of up to £5,000. 

Whistleblowing

As a fairly late addition to SBEEA, specific measures affecting the National Health Service will enhance protection in that sector in due course. 

There has also been considerable debate focused around the role of regulators in the context of whistle-blowing. The “Prescribed Persons” identified in the Public Interest Disclosure Act 1998, including bodies and organisations such as the Food Standards Agency and the Office of Fair Trading, have an over-seeing role in respect of whistle-blowing but have often been perceived as too remote from this issue. To encourage a more pro-active approach, SBEEA, will make it a legal requirement that regulators establish a National Whistleblowing Review Officer. Furthermore, Prescribed Persons will be obliged to report annually upon whistle-blowing within an existing report, or a standalone document, either of which must be accessible online. They must also report to Parliament. The content of such report is not yet finalised but, as a minimum, these bodies will be obliged to disclose information such as the number of whistleblowing complaints received and the action taken in response, if any.