From today, 25 June 2013, the following provisions of the Enterprise and Regulatory Reform Act 2013 will come into force:
- No qualifying period for unfair dismissal in relation to political affiliation / belief;
- Power to vary the maximum compensatory award for unfair dismissal;
- Whistleblowing disclosures not protected unless believed to be made in the public interest;
- Tribunals given the power to reduce compensation where protected disclosure is not made in good faith;
- Wider meaning of ‘worker’ for protected disclosure claims; and
- Changes to costs and deposit orders.
Additional provisions are expected to be introduced later in the Summer. We will provide an update in due course.
Impact for Employers
The most significant changes for employers are those relating to unfair dismissal and whistleblowing.
The increased protection for dismissal relating to political affiliation and belief means no qualifying service period will be required. However, dismissal relating to political affiliation will not be deemed to be automatically unfair and so the usual test of fairness will apply.
The new ‘public interest’ requirement for the protection of whistleblowing disclosures will be welcomed although, somewhat unusually, it seems that complaints relating to an individual employee’s private contractual obligations may still be protected, provided a public interest element can also be demonstrated. To counter-balance the new ‘public interest’ requirement, it will no longer be necessary to show ‘good faith’ in order for an employee to have disclosure protection. However, if a disclosure has not been made in good faith, the tribunal will be entitled to reduce a claimant’s compensatory award by up to 25%.
Finally, in terms of the upper compensatory award limit for unfair dismissal, it should be noted that the power to make an order to change the limit is all that is being granted today. However, a draft order has already been placed before Parliament to vary the maximum award to the lower of a year’s gross pay or the current overall cap of £74,200. This is likely to be implemented next month, and will apply in cases where the effective date of termination is after the date on which the order is made. It is anticipated that, going forward, the power may also be used to introduce a lower statutory cap for small businesses.