Pavlos Paschali, specialist employment law solicitor at Levenes Employment
The middle of 2013 sees a raft of important changes to employment law taking effect. We’ll take a closer look at the aspects of these new laws which might affect recruiters both in the work that they do, and also as employers usually of a small to medium size.
On 25 April 2013 both the Enterprise and Regulatory Reform Act 2013 (ERRA 2013) and the Growth and Infrastructure Act 2013 came into effect. These set out a number of new provisions, which will come into force over the course of summer-autumn 2013. The government’s objectives were to remove what it believed were barriers to recruitment, to increase productivity and to streamline the employment tribunal system. Readers can decide for themselves whether they believe that these have been achieved!
The most relevant parts of ERRA 2013 which come into force on 25 June 2013 are:
- The 2-year qualifying period for unfair dismissal will not apply where the main reason for dismissal is the employee's political opinions or affiliation. This is to give effect to a ruling by the European Court of Human Rights that the UK’s current employment legislation did not give sufficient protection to the right of freedom of assembly and association.
- Significant revisions to employment tribunal procedure and the orders that an Employment Tribunal can make (this is discussed in more detail below).
- The government will have the power to limit the amount of the compensatory award in unfair dismissal cases. It will do this from July 2013 by limiting such compensation to either the maximum statutory limit of £74,200, or a year’s pay, whichever is lower.
- For an employee relying on the protections available to whistle-blowers, their disclosure now has to be in the public interest, although they no longer have to be acting in good faith.
On 29 July 2013, new Employment Tribunal rules of procedure will come into force. These are designed to simplify the process and give tribunals more flexibility about managing cases. Most significantly, fees will need to be paid in order to start a claim at the employment tribunal and to appeal. These fees are perhaps the biggest change to the employment tribunal process, which has remained free to users since its inception in 1964. By way of example, a claimant pursuing a claim of unfair dismissal which has a hearing lasting only 1 day will now have to stump up £1,100 in tribunal fees before their case will be determined. These fees do no only apply to claimants; employers will have to pay for applying to dismiss a claim, to review a decision, or to set aside a default judgment.
From an as yet to be determined date in summer 2013, so-called “pre-termination negotiations” will become inadmissible as evidence in unfair dismissal proceedings (except where certain very limited exceptions apply). The government’s rationale for this provision is to make it easier for employers to have discussions with employees about ending their employment without a fear of those comments being used against them. Many employers already have such discussions with employees, and the new provisions will not excuse the need to handle such situations sensitively.
Also due to be introduced this summer is the ‘portable’ CRB check (now called a ‘DBS check’) by the launch of the Portable Disclosure and Barring Service. The government will set up an Update Service which will mean that once individuals have registered for a CRB check, it will become available for organisations to check online without the individual needing to re-apply. It will also be automatically updated online.
1 September 2013 will see the introduction of the much-maligned “employee shareholder” scheme. This will create a new class of employee, who, in return for a minimum of £2,000 worth of shares in his employer, will agree to give up certain of their employee rights. The attraction to the employee is that any gain on the first £50,000 of shares will be exempt from capital gains tax. An employer cannot compel existing employees to convert to this new status, but there is nothing stopping an employer from dictating that any new jobs are to be recruited on this new basis.
What are they important effects of the new status? The employee shareholder would have the same rights as an employee but with the following exceptions:
- No right to request time off for study or training.
- No right to make a flexible working request (except in a limited way for those returning from parental leave).
- No right to bring a claim of ordinary unfair dismissal.
- No right to a statutory redundancy payment.
- The employee must give a longer period of 16 weeks' notice if they want to return early from maternity/family leave.
A number of protections are included however for existing employee and job applicants:
- Any existing employees who refuse to become employee shareholders cannot be dismissed or suffer a detriment as a result.
- Jobseeker's allowance will not be stopped if an applicant rejects a job offer as an employee shareholder.
- The employer’s offer of employee shareholder status must include a statement setting out the employment rights that would be waived and the rights attached to the shares.
- The individual must receive independent legal advice about the offer, paid for by the employer, whether or not the offer is accepted.
- There will be a 7-day "cooling off" period from the day legal advice is received.
There are attractions to this new form of employment status for both employers and employees, although as a result of concessions made in the House of Lords there are now further layers of complexity. One of the key issues is likely to be how the employer’s shares are to be valued and whether an inferior class of shares with limited rights will be sufficient for the new status to take effect. Quite how many employers will seek to overcome the hurdles for the promise of ostensibly simpler dismissals remains to be seen. The advice from lawyers, as always, is that a consideration of the likely issues at an early stage will be vital to ensure that a relationship under the new status gets off to a smooth start.