The Enterprise Bill, described as the “Christmas Tree Bill” on its emergence in 2015 (due to “all of the baubles on it”) has finally received Royal Assent this week.
Of the various pieces of legislation proposed by the newly formed Government last year, the Enterprise Act is amongst the most far-reaching in effect, introducing employment law changes as varied as improved rights for Sunday workers, strengthening of apprenticeships and the much talked-about cap on public sector exit payments. Many of these changes will now require regulations to bring them into effect but the principles are now set. It is worth noting also that the impact of devolution is increasing apparent in emerging legislation, many of the Act’s provisions applying directly to England only and not being automatically applicable in Scotland, Wales and Northern Ireland.
Key provisions in the Act affecting employment law are as follows:
The creation of a Small Business Commissioner
The Enterprise Act establishes this statutory role with a view to supporting small businesses in resolving disputes and by providing general advice and support. (Small businesses are defined as private enterprises with fewer than 50 employees). The primary aim of the Small Business Commissioner will be to assist smaller businesses which run into difficulties with larger organisations and may be disadvantaged by an imbalance in bargaining position and resource: late payments being highlighted as a particular issue.
Larger businesses entering in contracts with smaller businesses and who do not adhere to the contract terms or pay on time, for whatever reason, can expect some interaction with this new office. With commercial relationships likely to be at stake if intervention is too heavy-handed, however, it does seem as if the aim of the Commissioner is to be resolution, not confrontation. As such, voluntary mediation services will be offered to the parties. Where that is not appropriate, the Commissioner can investigate and provide conclusions to referred-complaints, his or her findings potentially providing a strong platform for any subsequent litigation or referral to an external ombudsman.
Overhaul of Apprenticeships
The Government has set an ambitious objective of 3 million apprenticeships by 2020. To help achieve this, the Enterprise Act facilitates the setting of apprenticeship targets in the public sector in England (apprenticeship policy being a devolved matter in Scotland, Wales and Northern Ireland). The targets will be set by future regulation but, in principle, will apply only to those public bodies with 250 or more employees.
Indications suggest that, as and when the targets are introduced, they are likely to require apprenticeships to account for a minimum of 2.3% of staff within affected public bodies. Those bodies will be required to report annually on progress.
It is not just the numbers of apprenticeships that the Enterprise Act aims to boost. The Act also introduces a statutory definition of “apprenticeship” in England, to help set minimum standards. In future it will be an offence to label any training as an “apprenticeship” unless it satisfies the statutory requirements or forms part of an individual’s employment. The Act also paves the way to the creation of a new employer-led Institute for Apprenticeships to regulate quality. In due course it seems likely that registration scheme may be set up for training providers.
In recent years we have already seen divergence in the forms of recognised apprenticeship in the UK, as the English model agreements were replaced and took a different form from those in Scotland. This trend will certainly now continue, as the Act recognises. Employers with operations in devolved areas of the UK will therefore need to atune to the fact that differing requirements may apply in Scotland, Wales and Northern Ireland.
Rights of Sunday workers
Following a much-reported rejection of Government proposals to reduce restrictions upon Sunday trading for larger shops and allow longer opening hours, the Act instead retains only those proposals aimed at improving the lot of Sunday workers. The Act amends the current “opting-in” and “out” of the Employment Rights Act 1996 so that the amount of notice workers engaged in larger shops are obliged to give their employer if they wish to opt-out from Sunday working, is reduced to one month (instead of three, which will continue to apply to those working in smaller businesses). It also provides more opportunity for objection to working additional hours on a Sunday.
Restriction on Public Sector Exit Payments
The most high-profile and debated aspect of the Act is its provision to cap termination payments to public sector workers. Draft Regulations to effect this change are already published and will introduce a cap of £95,000 to any such payments, including elements such as ex-gratia payments, notice pay and pension. Here also, however, implementation may differ between devolved regions as Scotland, Wales and Northern Ireland will need to decide whether to apply to the provisions to their devolved bodies and workforces. This may even result in differing financial caps across the UK.
Subject to the exercise devolved powers referred to above, once finalised, the regulations will apply to all public sector employees and officeholders, Ministers and Special Advisers in UK (including all entities within central and local government and most non-financial public corporation services but excluding, for example, various financial institutions and regulatory bodies, TV and Arts organisations and the Armed Forces).
The regulations are expected to come into force in October 2016. For more expansive comment on this subject, see our guidance.
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Recent months have seen the realisation of much new policy and legislation promised by the newly-formed Government in 2015. The Enterprise Act forms an important aspect of those developments but must also be viewed by employers as part of the bigger picture, not in isolation. For example, many other changes are afoot which will change the face of apprenticeships in the UK in due course, the apprenticeship levy in 2017 being a significant factor in terms of funding. Similarly, public sector exit pay is currently the subject of far wider scrutiny by Government, including how it is calculated and the operation of the Local Government Compensation Scheme, as well as falling within potential tax reforms and revision of the £30,000 tax threshold.