Following its recent announcement in the Queen’s Speech the Enterprise and Regulatory Reform Bill (the “Bill”) has now been published. The Bill covers a number of key provisions that, if enacted, would impact upon employment law including:
- Mandatory pre-claim Acas conciliation – clauses 7 to 9 of the Bill require prospective claimants to contact Acas prior to commencing tribunal proceedings so that parties can be offered conciliation in an attempt to settle within a prescribed period to avoid the tribunal system and save on costs.
- ‘Rapid resolution’ scheme – clause 10 introduces a scheme where parties can consent in writing to appoint a ‘legal officer’ to determine their claim without the need for a hearing. However, this scheme will only be available for simple or low value claims.
- Changes to Employment Appeal Tribunal (EAT) composition – the Bill allows for proceedings in the EAT to be heard by a judge sitting alone, unless directed otherwise.
- New limit on the compensatory award for unfair dismissal – clause 12 of the Bill gives power to the Secretary of State to limit the compensatory award for unfair dismissal. The new limit could be: (a) a specified amount of between one and three times median annual earnings, based on official figures; (b) a specified number, not less than 52, multiplied by a week's pay of the individual (it is not clear whether an individual's week's pay in this context would be subject to the statutory limit on a week's pay) or (c) the lower of the two.
- Financial penalties for employers in breach of employment law – tribunals will have a discretionary power to impose financial penalties on employers of 50% of any financial award where they are found to have breached a claimant’s employment rights and the employer’s breach had “aggravating features”. What constitutes an aggravating feature will be for the tribunal to decide, but such a feature is likely to be found where the employer’s action was deliberate or committed with malice, the employer had a dedicated HR team or the employer committed repeated breaches of the employment right concerned. The penalty would be 50% of any financial award ordered by the tribunal against the losing employer, subject to a minimum of £100 and a maximum of £5,000. If an employer pays 50% of the penalty within 21 days, their liability is discharged.
- Public interest’ test for whistleblowing claims – clause 12 of the Bill states that, for a whistleblowing claim under the Employment Rights Act 1996 to succeed, a claimant must show that he or she believed that their disclosure was made in the public interest and their belief was reasonable in the circumstances.
- ‘Settlement’ agreements – clause 16 has renamed compromise agreements. These will now be called ‘settlement agreements’, which better reflects their use and content. The latest reading suggests there will be no need for an existing dispute which is required under the ‘without prejudice’ rule.
Although the Bill is set to make a number of changes to employment law, it is still in draft form and could potentially be amended before becoming law.