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What next in employment law?

by
01 February 2015, at 12:00am

Gareth Edwards highlights some of the current employment law issues and changes – some of which come into effect during the next few months – and explains how they might impact upon businesses

LAST year saw some very significant changes to employment law in England and Wales with a number of further changes to legislation to come in over the next few months.

Employment Tribunal fees

One of the most significant changes to the employment law landscape in 2013 was the introduction of a fee regime in July within the employment tribunal system.

Employees seeking to bring claims in the employment tribunal now need to pay a fee to initiate their claim, and then pay a further hearing fee in order to proceed to a full employment tribunal hearing.

The introduction of a new fees remission scheme at the beginning of October 2013 provided some answers to the question of how employees without significant disposal income might be able to afford some of the tribunal fees.

Interestingly, a decision is awaited in relation to UNISON’s challenge of the entire fee regime. If the High Court upholds the complaint and concludes that the employment tribunal fee regime is unlawful, the government has agreed to repay all of the fees that have already been paid.

For the moment, employers must watch for further developments in relation to the introduction of an employment tribunal fee system.

National Minimum Wage increase 

As is now the custom, the National Minimum Wage (NMW) changed at the start of October. The standard adult rate has increased to £6.31 an hour with increases to the minimum rates applicable to young workers and apprentices.

All businesses should review their rates of pay to check that the new minimum wage rates are being met in order to avoid potential penalties. HMRC enforcement officers will serve employers who fail to pay the NMW with an underpayment notice. 

This requires those employers to pay the employee the arrears of NMW owed and pay a financial penalty – up to £5,000 – to the government. From October 2013, HMRC can now “name and shame” those employers who flout the NMW.

Director’s remuneration

New rules apply to UK quoted companies with effect from 1st October 2013. A quoted company’s annual director’s remuneration report will now need to disclose remuneration and loss of office payments to directors, including a single figure for the total pay each director received during the previous financial year.

Quoted companies will need to implement a new remuneration policy, the content of which will be subject to binding shareholder approval every three years. Most interestingly from an employment law perspective, quoted companies will be prohibited from making a remuneration or loss of office payment to a director unless the payment is consistent with the remuneration policy or with specific authorisation from shareholders.

Details of the proposed payment to the director – such as a termination payment made under a settlement agreement – will need to be published on the quoted company’s website.

Directors will be liable for fines for failure to prepare the remuneration report and for failing to supply the appropriate information to shareholders. 

Transfer of Undertakings: new regulations 

The government has published new Transfer of Undertakings (Protection of Employees) Regulations. Whilst perhaps not the total revamp that some employers might have been looking for, the new TUPE Regulations (as they’re known) will still have a significant impact upon businesses acquiring new business or changing service providers.

The most significant developments are:

  • The current provisions relating to services provision changes will remain; however, for a service provision change to arise the activities carried on after the change must be “fundamentally or essentially the same” as those carried on before it.
  • The seller in a transaction to which TUPE applies will have longer in which to provide the employee liability information in advance of the transfer date;
  • Change of location will amount to acquiring new business or changing service providers.

The most significant developments are:

  • The current provisions relating to services provision changes will remain; however, for a service provision change to arise the activities carried on after the change must be “fundamentally or essentially the same” as those carried on before it.
  • The seller in a transaction to which TUPE applies will have longer in which to provide the employee liability information in advance of the transfer date;
  • Change of location will amount to an economic, technical or organisational reason, meaning that redundancies due to a simple change of location where the buyer has a different place of work to the seller will not necessarily be automatically unfair; and
  • Micro businesses (10 or fewer employees) will be permitted to consult directly with employees where there is no recognised independent trade union or existing employee representatives.

The government’s intention in proposing these changes has been to support flexibility and effectiveness of the labour market, and to remove some of the perceived unfair legal risks that businesses face.

Whether these objectives will be met remains to be seen, but understanding the obligations upon both sellers and buyers in transactions involving employees remain important, with significant costs arising from getting the legal position wrong.

Discrimination questionnaires

The discrimination questionnaire procedure is due to be abolished on 6th April 2014. The government concluded that the questionnaire process, introduced in 1975, did little to resolve matters before the Employment Tribunal claim commenced and for that reason should be abolished. 

Discrimination Questionnaires received before 6th April 2014 will still need to be responded to in the usual way.

Compulsory pre-claim ACAS conciliation procedure 

The government has announced a new compulsory pre-claim ACAS conciliation procedure that is due to take effect in April 2014.

This mandatory procedure will require an employee to submit details of his or her dispute or concern to ACAS before bringing a claim.

Having done so, ACAS will offer both parties the option of pre-claim early conciliation as a means of resolving their dispute without recourse to the employment tribunal.

It remains to be seen how this process will work in practice, but the proposed change suggests a greater opportunity for employers and employees to resolve disputes at an earlier stage of the proceedings and perhaps avoid extensive legal and management costs further down the line.

Penalties on employers who lose in the Employment Tribunal 

Also from April 2014, employment tribunals will gain the power to impose a financial penalty of 50% of any financial award, up to a maximum cap of £5,000, on employers who lose at tribunal.

While applying this levy will not be mandatory, but at the tribunal’s discretion, all employers involved in employment tribunal litigation from April year onwards should be aware that, if they lose the claim, they could be forced to pay a further £5,000 by way of a penalty.

New approach to sickness absence 

Back in January 2013 the government announced that it would introduce a new health and work assessment and advisory service from Spring 2014. The plans include a state-funded assessment by occupational health professionals for employees who are off sick for four weeks or more and case management for employees with complex needs to facilitate their return to work.

The government has announced that it will also introduce a new tax exemption for health-related benefits paid by employers to support an employee’s return to work – capped at £500.

As is often the case, the impact of these changes will only be understood once they have come into effect, but the summary above gives a flavour of what might change over the next six months.