Summaries of new employment legislation due to come onto the statute books over the next year
NEW LEGISLATION IN 2011
1 February 2012
New tribunal award limits come into force. The maximum limit on a week’s pay will increase from £400.00 to £430.00 and the maximum unfair dismissal compensatory award will increase from £68,400.00 to £72,300.00 for dismissals taking effect on or after 1 February 2012.
The qualifying period for unfair dismissal claims will be increased from 1 to 2 years.
The maximum amount of costs an employment tribunal can award will increase from £10,000.00 to £20,000.00.
The standard rates for statutory maternity pay, statutory paternity pay and statutory adoption pay will increase from £128.73 to £135.45. The weekly earnings threshold for these payments will rise from £102.00 to £107.00.
Statutory sick pay will increase from £81.60 to £85.85, with the weekly earnings threshold also rising from £102.00 to £107.00.
Maternity allowance will increase from £124.88 to £135.45, with the earnings threshold remaining at £30.00.
The amount of deposit order a tribunal will be able to order a party to pay will increase from £500.00 to £1000.00.
Witness statements will be taken as read in the tribunal unless a Judge directs otherwise and tribunals will be given powers to direct parties to bear the costs of witness attendance, including the cost of witnesses called by the successful party. The government will withdraw state funded expenses.
Unfair dismissal cases in the tribunal will be heard by a Judge sitting alone without lay members. Progress on this change will be reviewed after a year.
Working time rules are expected to be amended to allow holiday to be carried forward in limited circumstances.
Pension auto enrolment will begin for larger employers. The new duties will be formally implemented over a 4 year period.
Future changes: no date yet announced
ACAS conciliation. Claimants will be required to submit details of their dispute to ACAS first, at which point they will be offered pre-claim conciliation (PCC) for a period of one month. If it is refused by either party, or is unsuccessful, the Claimant will be able to go ahead and present their claim to the tribunal. If the parties enter into PCC this will “stop the clock” on the limitation period to present the claim to the tribunal. The Claimant will have one month after the conclusion of the PCC to present their claim to the tribunal.
Mediation. The government will undertake a “long term reform programme” to increase the use of mediation to resolve disputes. It proposes to work with the private sector to share knowledge of mediation with smaller businesses.
Financial penalties for employers. The government intends to introduce financial penalties for employers of half the total award made by the tribunal if they lose (minimum threshold of £100.00 and a maximum cap of £5000.00). Where a non-financial award is made, the tribunal will be able to ascribe a monetary value. The penalty will be reduced by 50% if paid within 21 days.
Consultation on “protected conversations” between employers and staff about employment issues without the risk of dispute.
Consultation on Compromise Agreements and whether they can be simplified.
Consultation on a “Rapid Resolution Scheme” which would provide swifter and cheaper determination of low value straightforward claims, such as claims for holiday pay.
Consultation on removing the third party harassment provisions in the Equality Act 2010. These provisions currently require employers to take reasonable steps to protect employees from third party harassment. However, the government considers that this obligation on employers is an “unworkable requirement” and intends to consult on its removal.
Issues due before the courts
In January 2012, the Court of Appeal is due to hear the employer’s appeal against the High Court’s decision in the case of Clyde & Co LLP & another -v- Winkelhof that a partner could not be compelled to stay her tribunal whistleblowing and sex discrimination claims pending completion of the dispute resolution procedure set out in the partnership agreement.
The Court of Appeal’s reserved decision is awaited in the case of Woodcock -v- Cumbria Primary Care Trust on whether an employer could justify dismissing an employee early to avoid the cost of paying an enhanced pension.
On 17 January 2012 the Supreme Court is due to hear the combined appeals in Seldon -v- Clarkson Wright & Jakes and Homer -v- Chief Constable of West Yorkshire Police which consider age discrimination and retirement and whether the employer’s requirements in each case were a proportionate means of achieving a legitimate aim.
Bribery Act 2010 (Posted 27/08/2010 by Elaine Young)
The Bribery Act 2010 comes into force later this year (probably October) and reforms and updates existing legislation, some of which has been in place for over 100 years.
The Act provides for four bribery offences:
- Bribing – the offer, promising or giving of an advantage
- Being bribed – requesting, agreeing to receive or accepting an advantage
- Bribing a foreign public official
- The ‘corporate offence’ where a commercial organisation fails to prevent persons performing services on its behalf from committing bribery
The new corporate offence under section 7 of the Act will be of most concern to employers. A company can be found guilty of this offence if a person performing services on behalf of the company (eg employee, worker, consultant) bribes another person for any of the following reasons:
- To obtain or retain business for the company
- To obtain or retain an advantage in the conduct of the company’s business
This offence can be committed in the UK or overseas and if found guilty the company and its directors could be subject to criminal sanctions including fines.
There is however, a defence against this as the Act makes provision for companies to escape liability of it can be shown that adequate procedures designed to prevent bribery being committed where in place when the offence occurred. What constitutes adequate procedures is currently unclear although the Government is obliged to issue guidance. There is currently some concern as to whether such guidance will be available in time for organisations to review policies and make the necessary changes before the Act becomes law.
Companies would be well advised to starting reviewing policies and procedures now, particularly in the areas of Codes of Conduct, gifts and hospitality and whistleblowing. Employment contracts should also include a statement of penalties relating to corruption. The Act will not change the disciplinary procedures to be followed so procedures currently in place will be adequate.
Finally establishing an anti-corruption culture and program led by a senior officer will also help to defend companies in the event of a charge. This should include anti-corruption training for all employees.
EQUALITY ACT 2010
The Equality Act 2010 consolidates, harmonises and expands existing discrimination law. The bulk of it is expected to come into force in October 2010.
The Act protects against discrimination in the workplace because of:
- gender reassignment
- marriage and civil partnership
- pregnancy and maternity
- religion or belief
- sexual orientation
These are described as “protected characteristics” and reflect existing law, with a couple of changes. The definition of disability has been widened so that it is no longer necessary for employees’ impairments to affect specified “capacities” (such as mobility). Gender reassignment will now also cover those whose reassignment process is not medically supervised.
Types of discrimination
The Act uses the familiar concepts of direct discrimination, indirect discrimination, victimisation and harassment. But there have been some changes.
Discrimination occurs if an employer discriminates against an employee because of a protected characteristic, whether or not the employee possesses that characteristic (except in the case of marital status or civil partnership).
It will be unlawful to discriminate against employees because of their connection with someone else who possesses a protected characteristic, or because they are mistakenly perceived to possess a protected characteristic. This is sometimes called discrimination by association or perception.
Unjustified indirect discrimination is already unlawful in relation to most protected characteristics. The changes extend coverage to include gender reassignment and disability (but not to pregnancy and maternity).
Employers can already be held liable for the sexual harassment of their employees by a third party (for example, someone outside their organisation). The Act extends liability for third-party harassment to all protected characteristics (other than pregnancy/maternity and marriage/civil partnerships) where the employer has failed to take reasonable steps to prevent it, and provided the employer knows that the employee has experienced third-party harassment on at least two prior occasions.
A completely new type of disability discrimination is introduced:
Detriment arising from disability
This replaces the concept of “disability-related discrimination”. It occurs when employers treat employees in a detrimental way because of something that is a consequence of their disability. A typical example would be dismissing employees with poor attendance records when their absences were caused by disability. This would be unlawful unless dismissal could be justified as a “proportionate means of achieving a legitimate aim” or the employer could not reasonably have been expected to know of the disability.
The Act also contains a provision covering claims of direct discrimination because of a combination of two protected characteristics (excluding pregnancy/maternity, or marriage/civil partnerships). It is not clear when this will take effect but, in practice, such claims can be brought as a standard direct discrimination claim.
Under existing law, employees who claim they are paid less because of their sex must identify a “comparator” of the opposite sex who is in the same employment (which usually means employed by the same employer), doing equal work but paid more. The legislation retains the need for a comparator, with two changes. The Act will allow:
- comparison with a successor to a post; and
- “hypothetical comparators”, where there is direct sex discrimination in contractual pay but no actual comparator exists.
The Act prevents employers from taking action against employees who discuss their pay with a view to finding out if there has been any unlawful discrimination. In addition, larger employers could be forced to publish their gender pay gap (the difference in pay between men and women) in due course.
The Act extends the scope for employers to take “positive action” as a proportionate means of enabling or encouraging people with a protected characteristic to overcome or minimise disadvantage, or participate in activity where they are under represented. Positive action would include offering training to particular groups of employees.
The law also contains a provision that would allow employers to recruit or promote employees because of their protected characteristic if they are “as qualified as” other candidates, provided this is done on a case-by-case basis rather than as a matter of policy. However, no date has been given for bringing this provision into force.
Pre-employment health questions
Another new feature is a ban on asking job candidates about their health before offering them work.
Some questions will still be permitted: for example, those necessary to establish whether a candidate can undergo an assessment for the job such as a test or an interview; carry out an intrinsic function of the job itself; or to monitor diversity. But untargeted health questionnaires, forming part of the application process, will no longer be allowed.
The Equality and Human Rights Commission can take action if the rule is contravened, although this is only likely to happen in the most serious cases.
Employers that do ask job candidates about their health pre-employment will also find it harder to defend disability discrimination claims from unsuccessful applicants. A tribunal would presume the employer had discriminated; the employer would then have to prove their innocence.
Public-sector equality duty
Existing public-sector duties will be replaced (on a date to be confirmed, but not before April 2011) by an overarching equality duty, which will apply to all protected characteristics other than marriage/civil partnership.
The duty will require public bodies, and organisations carrying out functions of a public nature, to:
- have due regard of the need to eliminate discrimination;
- advance equality of opportunity; and
- foster good relations between diverse groups
The Act expands tribunals’ powers to make recommendations to employers on the action they should take where discrimination has been found. Tribunal recommendations can be aimed at reducing the effect of discrimination on either claimants (as at present) or the wider workforce (this is new). There is, however, no sanction for employers failing to follow a recommendation that does not relate to the claimant in a case.
LEGAL TIMETABLE – DEADLINES
New tribunal award limits come into force
1 February 2011
The Employment Rights (Increase of Limits) Order 2010 (SI 2010/2926) increases the limits of certain employment tribunal awards and other amounts payable under employment legislation. The maximum unfair dismissal compensatory award rises from £65,300 to £68,400 and the maximum amount of a week’s pay for the purpose of calculating a statutory redundancy payment and the basic and additional awards for unfair dismissal increases from £380 to £400. The rise in the limits applies where the event that gives rise to the award or payment occurs on or after 1 February 2011. The Order can be viewed on the UK legislation website.
Statutory maternity, paternity and adoption pay increase
3 April 2011
The standard rate of statutory maternity, paternity and adoption pay increases from £124.88 to £128.73. Information on the new rates (PDF format, 232K) can be viewed on the Department for Work and Pensions website.
Additional paternity leave and pay comes into force
3 April 2011
Employees who are fathers, or spouses or partners of mothers, and employees who have been matched for adoption and are spouses or partners of the person taking adoption leave are entitled to take additional paternity leave of up to 26 weeks in the first year of their child’s life or the first year after the child’s placement for adoption, and may be entitled to additional paternity pay. Additional paternity leave has effect in relation to children whose expected week of birth is on or after 3 April 2011, or who are matched for adoption with a person who is notified of the match or on after 3 April 2011.
Single equality duty introduced
6 April 2011
The Equality Act 2010 replaces the current public sector duties to promote equality with a single equality duty extending to other protected characteristics. This will oblige public authorities to have regard to the need to eliminate discrimination, harassment, victimisation and other prohibited conduct when exercising their functions. The Equality Act 2010 can be viewed on the OPSI website.
Increase in personal allowance and national insurance contributions for employees
6 April 2011
The primary employee threshold for national insurance contributions increases by £570. National insurance contributions increase by 1% for employees. The personal allowance for income tax for basic rate tax payers under the age of 65 is increased by £1,000. The Coalition: our programme for government (PDF format, 475K) (on the Cabinet Office website) sets outs the Government’s five-year plan.
Increase in national insurance thresholds and contributions for employers
6 April 2011
Employers’ national insurance thresholds increase by £21 per week above indexation. Employers’ national insurance contributions increase by 1%. The Coalition: our programme for government (PDF format, 475K) (on the Cabinet Office website) sets outs the Government’s five-year plan.
Right to make a request in relation to study or training for organisations with fewer than 250 employees
6 April 2011
The Apprenticeships, Children and Learning Act 2009 (on the OPSI website) introduces a statutory right to make a request in relation to study or training for employees in organisations with fewer than 250 employees. Employers will be obliged to consider seriously requests that they receive, but will be able to refuse a request where there is a good business reason for doing so. The right to make a request in relation to study or training was introduced for employees in organisations with 250 or more employees on 6 April 2010. The Order which brings this provision into force can be viewed on the OPSI website.
Default retirement age abolished
6 April 2011
Employers are prohibited from issuing new notifications of retirement using the default retirement age. An employer that issues a notification of retirement before 6 April 2011 will be able to retire the employee if his or her retirement date is before 1 October 2011. An employer cannot prescribe a compulsory retirement age, unless it can justify it as a proportionate means of achieving a legitimate aim.
Right to request flexible working extended to parents of children under 18
6 April 2011
The Government grants parents of children under 18 the right to request flexible working. This extends the right to request to work flexibly already conferred to parents of children under the age of 17, or under the age of 18 if the child is disabled, and to employees who care for adults aged 18 or over. The Regulationsextending the right to request to work flexibly are available on the UK legislation website.
Statutory sick pay increase
6 April 2011
The standard rate of statutory sick pay increases from £79.15 to £81.60 per week. Information on the new rates (PDF format, 232K) can be viewed on the Department for Work and Pensions website.
Positive action provisions of the Equality Act come into force
6 April 2011
Section 159 of the Equality Act 2010, which permits employers to treat individuals with a protected characteristic more favourably than others in connection with recruitment or promotion, comes into force. This applies only to candidates of equal merit and the more favourable treatment must enable or encourage an individual to overcome or minimise a disadvantage or participate in an activity where he or she is under-represented in that activity. Read the Equality Act 2010and order bringing the section into force on the UK legislation website.
Bribery offences introduced
The Bribery Act 2010 aims to promote anti-bribery practices among businesses, by modernising the law on bribery. The Act introduces a corporate offence of failure to prevent bribery by persons working on behalf of a business. A business has a defence if it has adequate procedures in place to prevent bribery. The penalty is an unlimited fine. For individuals, it will be a criminal offence to give, promise or offer a bribe and to request, agree to receive or accept a bribe. The legislation raises the maximum penalty for bribery by individuals from seven to 10 years’ imprisonment. The Act can be viewed on the OPSI website.
Basic pension uprated
Increases to the state pension and benefit payments are based on the consumer prices index.
Annual limit on economic migration to the UK comes into force
The number of people permitted to enter the UK from outside the EU is limited to 20,700 per annum under the skilled worker route (except for those earning a salary of more than £150,000 or in-country applications from those in the UK), and 1,000 per annum under the new exceptional talent route. Tier 2 (general) is open only to migrants performing jobs at graduate level and tier 1 is restricted to all but entrepreneurs, investors and the exceptionally talented. The minimum salary for individuals who wish to enter the UK under the intra-company transfer route for more than 12 months is £40,000 but there is no limit on the number of migrants in this category.
Transnational Information and Consultation of Employees (Amendment) Regulations 2010 come into force
5 June 2011
The Regulations implement the recast European Works Council Directive (2009/38/EC). The Regulations provide new rights to European Works Council members and those of special negotiating bodies, for example establishing a right to time off to undergo training to help them undertake their duties. TheRegulations can be viewed on the OPSI website.
EU blue-card Directive must be implemented
19 June 2011
The Directive defines conditions of entry and residence for more than three months of people who are not EU citizens and apply to be admitted to the EU for the purpose of high-qualified employment. Such people will be issued with an “EU blue card”. The Directive (PDF format, 796K) can be viewed on the European Union website.
Equal treatment for agency workers
1 October 2011
The Agency Workers Regulations 2010 (SI 2010/93) give agency workers the same basic employment conditions after 12 weeks in a given job as if they had been employed directly by the end-user. The Regulations implement the Temporary Agency Workers Directive (2008/104/EC). The Regulations can be viewed on the OPSI website.
Registration with the Independent Safeguarding Authority
To be confirmed
Further implementation of the Safeguarding Vulnerable Groups Act 2006 was due to include voluntary registration with the Independent Safeguarding Authority for all new entrants from 26 July 2010. Employers would have been obliged to check all new entrants from 1 November 2010. Individuals already working in a regulated activity and who have not moved into a new role with a new employer would have been able to apply for registration from 1 April 2011, with mandatory registration by 31 July 2015. The dates for registration are on hold and the Government is to review the vetting and barring scheme as a whole. The Act can be viewed on the OPSI website.
Flexible working for all employees
To be confirmed
The Government will extend the right to request flexible working to all employees. Currently, the right applies to those who have one or more children under the age of 17 (18 if a child is disabled) or who are carers. The Coalition: our programme for government (PDF format, 475K) (on the Cabinet Office website) sets outs the Government’s five-year plan.
Parental leave increases from three to four months
8 March 2012
The minimum parental leave following the birth or adoption of a child increases from three to four months. At least one of the four months will not be transferable between parents. Member states have until 8 March 2012 to bring this into force.
Personal Accounts scheme starts up under Pensions Act 2008
The Pensions Act provides that from 2012 all eligible workers, who are not already in a workplace pension scheme, are to be automatically enrolled into either their employers’ pension scheme or a new savings vehicle, known as a personal account scheme. To encourage participation, employees’ pension contributions will be supplemented by contributions from employers and tax relief. Details of thePersonal Accounts scheme can be viewed on the DWP website. The Act can be viewed on the OPSI website.
School leaving age is raised to 18
The Education and Skills Act 2008 changes the statutory framework to put a duty on all young people in England to participate in education or training until the age of 18. It also amends legislation about the provision of adult education and training, and support for young people. The Act can be viewed on the OPSI website.
“Flexible” maternity and paternity leave is introduced
Changes are made to maternity and paternity leave to give parents more flexibility as to when they take time off. It is expected that the changes will allow both parents to take leave at the same time, instead of the mother having to have returned to work before the father can take additional paternity leave, and allow parents to take time off in blocks, rather than all in one go.
Equalisation of state pension age for women
The state pension age for women is equalised with the state pension age for men by November 2018, with an expedited increase from April 2016.
State pension age rises to 66 years
The Pensions Act 2007 raises the state pension age from 65 to 66 years to reflect the ageing nature of the population. The rise in the state pension age to 66 for men and women begins gradually from December 2018 until April 2020. The Pensions Act 2007 also raises the state pension age to 67 and 68. The Act can be viewed on the OPSI website.
State pension age rises to 67 years
Between 2034 and 2036
The Pensions Act 2007 raises the state pension age for men and women to 67. This will occur between April 2034 and April 2036. The Act can be viewed on the OPSI website.
State pension age rises to 68 years
Between 2044 and 2046
The Pensions Act 2007 raises the state pension age for men and women to 68. This will occur between April 2044 and April 2046. The Act can be viewed on the OPSI website.
WHAT ARE THE PROPOSED EMPLOYMENT TRIBUNAL REFORMS AND WILL THEY WORK?
The government published its consultation on employment tribunal reform on 27 January. One of its main aims is to reverse a rise in tribunal claims, which were up by 56 per cent to 236,100 last year.
The proposals include introducing a fee for lodging tribunal claims (the amount to be determined by a consultation in the spring) and extending the qualifying period for employees bringing unfair dismissal claims from one to two years. Many employers view the one year’s qualifying service for unfair dismissal as a barrier to job creation. The government hopes to give businesses more confidence when taking on new employees and to encourage growth.
The introduction of a fee will force claimants to think twice before issuing a claim. However, employees increasingly have legal fees insurance with household or motor policies, which may cover this. Perhaps a more effective solution would be to concentrate on awarding costs routinely against the losing party. The effectiveness of increasing the qualifying period for claiming unfair dismissal to two years is also highly debateable. It may simply encourage more spurious discrimination claims from aggrieved employees, and for these claims there are no qualifying periods.
The paper also suggests that all claims should be lodged with Acas before they enter the tribunal system to allow the service one month in which to offer pre-claim conciliation in an attempt to resolve the dispute. However, Acas already has to offer to assist in resolving cases once they have begun. It is not clear how this measure will be any more effective at removing spurious claims before proceedings are issued.
On the other hand, most will welcome the proposals aimed at reducing the time spent on tribunal claims. Anything that can be done to alleviate the pressure on the employment tribunal system would appeal to common sense.
The suggestions include increasing the use of alternative dispute resolution, and shortening the length of a tribunal hearing if a claim proceeds. The consultation also aims to reduce the costs and time spent on hearings by:
• letting witness statements stand as evidence, rather than having to be read out, unless an employment judge specifies otherwise;
• stopping the payment of expenses to claimants, respondents and witnesses attending tribunal hearings;
• extending the jurisdiction for employment judges “sitting alone” to include straightforward unfair dismissal cases; and
• introducing a legal officer to deal with certain case management functions.
Other proposals include:
• widening the set of circumstances in which tribunals can strike out weak or vexatious claims;
• increasing the maximum level of deposit orders from £500 to £1,000 as a condition of continuing with a claim considered to have “little reasonable prospect of success”;
• a new rule for the provision of additional information about the nature of the claim, including a statement of loss; and
• formalising the process for settlement offers so that tribunals can adjust the amount of compensation if an offer is not accepted.
The consultation also suggests increasing the cap on cost awards from £10,000 to £20,000, and amending the methods used to determine statutory employment awards each year.
For employers, one of the main concerns will be a proposal to give tribunals the right to apply automatic financial penalties on organisations found to have breached employee rights in addition to compensation paid to successful claimants. This penalty would generally be half the total award to the claimant, between £100 and £5,000, and would be payable to the exchequer.
This aside, business groups appear to consider that the proposals of reform overall are the first step in cutting employment red tape and allowing for growth. The consultation closes on 20 April 2011.