The Small Business, Enterprise and Employment Bill

Proposed changes to employment law in the Small Business, Enterprise and Employment Bill, which was announced in the Queen’s Speech, include:

  • A ban on exclusivity clauses in zero hours contracts.
  • The introduction of financial penalties for non- payment of an employment tribunal award or settlement reached following Acas conciliation. The penalty will be 50% of the outstanding sum subject to a minimum of £100 and a maximum of £5,000 and is payable to the Secretary of State, not the claimant. The penalty will be reduced by 50% if the full sum, and the reduced penalty, is paid within 14 days of receipt of a penalty notice from the employment tribunal enforcement officer.
  • New rules to limit the number of times that a party may postpone or adjourn an employment tribunal hearing and to allow costs orders for a late application to postpone or adjourn.
  • A change in the maximum penalty for breach of the national minimum wage legislation so that the £20,000 penalty will apply per underpaid worker.
  • New regulations obliging prescribed persons for the purposes of whistleblowing legislation to compile annual reports of disclosures made to them (without identifying the individual involved) and proposals to publish guidance and to give relevant groups (e.g. student nurses) whistleblowing protection.
  • The introduction of a new power to require high earners in the public sector to repay some or all of a termination payment if they are re-employed in the public sector within 12 months of leaving it.

Work, rest  and play

On 30 June 2014, the right to request flexible working was extended to all employees with 26 weeks’ continuous service, regardless of whether they have any caring responsibilities.

Previously the right to request flexible working only applied to parents of children or those caring for an adult and there was a prescriptive statutory procedure for dealing with requests. However, this procedure has now been replaced with a duty to deal with requests to work flexibly in a reasonable manner. Employers are advised  to follow the Acas code of practice, to give reasonable consideration to a request and ensure the whole process, including any appeal, is completed within three months (unless an extension is agreed).

The right is only to make a request to work flexibly; the employer does not have to agree to this. However, an employer can only turn down a request when there is a good business reason for doing so. The Acas code of practice still includes the eight statutory grounds on which a request may be refused, which includes cost to the employer, the ability to meet customer demand and the impact on quality and performance that a flexible working arrangement may have.

If an employer agrees to a request, this will normally result in a permanent change to the employee’s terms of employment, although the employer may be able to negotiate a change on a temporary or trial basis. If an employer refuses a request, there is a risk of a claim for discrimination (in particular, sex discrimination) and possibly constructive dismissal and therefore it is very important to follow a suitable process for considering requests and to be able to demonstrate good, objective business reasons for any decision to refuse the request.

Pay as you go

The European Court (ECJ) has held in the case of Lock v British Gas Trading Limited that the calculation of a worker’s holiday pay should include an amount to reflect the commission they would have earned had they not been on annual leave. This is a significant decision as most employers do not currently include commission in holiday calculations. Please see our email alert for further details

The employment tribunal in Lock will now have to determine whether the Working Time Regulations 1988 can be interpreted in a way which reflects the ECJ’s decision and, if so, what method of calculation should be used to determine the appropriate amount of commission to be paid.

We are also waiting for a decision from the EAT in the cases of Neil v Freightliner and Fulton v Bear which is likely to hold that voluntary overtime should also be included in calculating holiday pay. Employers who anticipate that the decisions in these cases are likely to have a significant effect on their business are advised to consider a strategy to deal with the outcome.

Beyond the call of duty

The Court of Appeal has clarified that the duty to make reasonable adjustments only applies to disabled employees and not to employees who are associated with a disabled person. The employee in this case, Hainsworth v Ministry of Defence, had a disabled daughter and she brought a claim when her request to be relocated to another base to facilitate training for her daughter was refused. Whilst the Court rejected this claim in relation to the duty to make reasonable adjustments, employers will still need to take care to avoid direct discrimination on grounds of association with a disabled person.

All is equal

From 1 October 2014, employment tribunals will be obliged to order employers who lose an equal pay claim to carry out equal pay audits in certain circumstances. The draft Equality Act 2010 (Equal Pay Audits) Regulations 2014 will apply in relation to equal pay claims presented on or after 1 October 2014. The employment tribunal will specify the classes of employees, and for what period, the audit must cover. The employer will be given at least three months to prepare the audit setting out the pay differences and reasons, together with the employer’s plan to avoid equal pay breaches. After the employment tribunal has determined whether the audit is compliant, the employer will be obliged to publish it on its website (if it has one) and keep it there for three years. The employer will also be obliged to inform all those whose pay information was included in the audit and explain where they can obtain a copy.

News in brief

  • An exemption for micro businesses from the obligation to inform and consult employee representatives in a TUPE transfer comes into effect for transfers on or after 31 July 2014.
  • From 1 October 2014, prospective fathers and partners of pregnant women will have the right  to unpaid time off work to attend up to two ante- natal appointments. There is a maximum of six and a half hours for each appointment.
  • From 5 April 2015, adopters will also be entitled to take time off to attend appointments to meet the child they intend to adopt, this will also be subject to a maximum of six and a half hours for each appointment.
  • From 1 October 2014, the national minimum wage will increase. The adult rate for workers aged 21 and over will increase to £6.50 per hour (from £6.31).