Government reforms: finalised

government-reformsThe Government’s central reform package, set out in the ERRB has now been finalised and become the Enterprise and Regulatory Reform Act 2013 (ERRA 2013). The Government has also published commencement dates for various parts of the Act and we set out the most relevant below. Those provisions with an ‘unknown’ date are planned to come into effect in October 2013 or April 2014 and we will provide more detail on these nearer the time.

BIS will shortly publish a detailed implementation timetable, but this is where we are for now:

25 June 2013

  • Qualifying period for unfair dismissal
    No period of service will be necessary for an unfair dismissal claim where the main reason for dismissal was the employee’s political opinions or affiliation. This is therefore a new form of unfair dismissal which is neither an ‘automatic’ unfair dismissal nor the ‘ordinary type which nowadays requires 2 years’ service.
  • Whistle-blowing – need for a public interest element
    The law will be amended to mean that disclosures are only protected if they are ‘in the public interest’ in the reasonable opinion of the employee. This change was apparently made to exclude employees manufacturing protection for themselves by making disclosures that are merely a complaint that their own contract of employment has been breached, for example. In other words, the disclosure has to be more than just self-serving for it to be protected. However, since it is only the employee’s own reasonable opinion that is the test for what is in the public interest, we can expect that this will prove to be a very low hurdle. Plenty of employees may subjectively “reasonably believe” that there is indeed a public interest element in the fact that their employer has breached their contract! Our view is therefore that this introduction of a need for there to be a public interest is virtually meaningless and will not change the law or practice in any notable way.
  • Whistle-blowing – bad faith
    Another change in whistle-blowing legislation is that there will no longer be a requirement that the disclosure has been made in “good faith”. Thus, disclosures made to service the personal interests of the employee, perhaps even to embarrass the employer, rather than inform the public of any real public interest element, will still be protected. The only residual relevance of a protected disclosure being made in bad faith is that if the Tribunal decides this was so, any compensation awarded to the Claimant can be cut by up to 25%. We find this change highly dubious!
  • EAT
    The Employment Appeal Tribunal’s composition is to be streamlined by removing the requirement for two lay members to sit with the judge in most cases. This mirrors the rule change that has already taken place in Employment Tribunal hearings dealing with unfair dismissal claims.

Summer 2013

  • Statutory settlement agreements
    The Government now intends to bring in the use of settlement agreements this Summer (covered in detail in our January 2013 Newsletter Latest Government changes: Confirmed changes: Settlement Agreements and Compensatory Award). A principal aspect of the reform is that any settlement agreement discussions will not be admissible as evidence in unfair dismissal claims. The aim here is to ensure that both employers and employees can propose and negotiate exit packages on a without prejudice basis. Our view is that the new statutory settlement agreements are a waste of time and will hardly be used. Since they only cover off claims for unfair dismissal, leaving the employee who signs one free to take the money and then sue the employer for any other sort of claim, which employer in its right mind would use one, when there are compromise agreements and ACAS pre-claim COT3 settlements available instead, that cover off the risk of all types of claim?
  • Compensatory award cap
    The unfair dismissal compensatory award will be limited to the lower of the current statutory cap (£74,200 from 1 February) or the claimant’s annual net salary.
  • Tribunal and EAT fees
    See Tribunal Fees: They’re nearly herehere.
  • New Employment Tribunals Rules of Procedure
    We still await the final version of the new rules. They were due to be published in May or June 2013, with implementation planned for sometime in late July to coincide with the introduction of Tribunal fees (see here). However, the latest news is that it may be as long away as February 2014 before the new rules, together with the new fees rules, are ready to finalise and bring into force. In summary the rule changes are:

    • an initial sift stage at which every case will be reviewed on paper by an Employment Judge to consider prospects and case management (although this already happens for most purposes);
    • a rule to permit Tribunals to limit oral witness evidence and representatives’ submissions at hearings (although, again, this already happens at most ET centres);
    • removal of the £20,000 cap on costs that can be awarded by a Tribunal;
    • a more flexible regime on holding hearings in private, and making restricted reporting and anonymity orders;
    • non-prescriptive guidance from the Presidents of Employment Tribunals in England and Wales and Scotland to supplement the new rules and aid consistency of approach;
    • making it easier to withdraw and dismiss claims; and
    • “Preliminary hearings” to combine and replace separate pre-hearing reviews (PHRs) and case management discussions (CMDs). Apparently unrepresented parties often became confused between the two types.

Unknown

Other heralded plans the Government has, whose implementation dates are currently unknown, are:

  • repealing the provision that makes employers liable for harassment of their employees by third parties in certain circumstances;
  • abolition of statutory (discrimination) questionnaires;
  • financial penalties for employers who lose an ET claim (likely 2014);
  • prohibition of caste discrimination (added to the Act at a late stage by the House of Lords – likely in 2014/15); and
  • power to introduce Tribunal discretion to order equal pay audits (not before 2014).