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Employment Law Changes in 2013

Employment Law Changes in July 2013

July 2013 is set to be a busy month for employment law.  On 29 July 2013, further changes from the Enterprise and Regulatory Reform Act 2013 will come into force, as will the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2013.

What does this mean to you as an employer?

The key points that you need to be aware of are as follows:

Employment Tribunal fees

From 29 July 2013, any claim submitted to an Employment Tribunal will attract a fee.  There will be two levels of fee depending on the type of the claim, based on its complexity.  There will also be two stages that trigger a fee.  The first, when the claim is submitted and the second when the Tribunal lists the case for a hearing.

There will also be a fee remission scheme, to assess whether Claimants must pay the fee or whether they get any financial dispensation.  This will depend on their income and capital.

It is hoped that the introduction of fees will reduce the number of nuisance claims that are submitted to the Tribunal, bringing it more in line with the system used in the civil courts.  This is good news for employers.  However, with the fee remission system in place, and with the majority of claims relating to a member of staff who has lost their job, it remains to be seen whether in practice this will have such a drastic effect.

At the conclusion of the matter, the Tribunal will also have the power to order that the employer reimburses the employee for some or all of the fees that they have paid.

New Employment Tribunal forms

Due to the new fee system, the Tribunal will be issuing new forms for employees and employers to use in order to submit their claim and then to defend the claim.  These are expected to be available online via the Tribunal website shortly.

No claim will be accepted by the Tribunal unless it is accompanied by a payment on a credit or debit card or a fee remission application.  This could mean that there is a delay between the claim being submitted and it is sent to the employer, particularly if there is a fee remission application to process.

So, what this means for employers is that you could be waiting longer for a claim to land on your doorstep.  I would usually advise that after waiting 4 months (3 months limitation plus a month for the Tribunal to process) an employer can usually consider themselves as “safe”.  This will alter that advice and extend that period even perhaps up to 6 months, depending on how long the fee remissions take to process.  This should become more clear with time.

Settlement agreements and pre-termination negotiations

The new statutory provisions on settlement agreements and pre-termination negotiations will also come into force on 29th July 2013.  This means that the parties to a claim will be prevented from referring to pre-termination negotiations in their evidence in relation to unfair dismissal claims.  If an agreement is reached in pre-termination negotiations, this agreement will be called a settlement agreement.  This will replace what we all commonly know as a compromise agreement.

Settlement agreements will allow employers to offer compensation to an employee as a part of a mutually agreed settlement to end employment where the employment relationship has broken down. Evidence in relation to these negotiations cannot be used in a subsequent claim made against them.

Acas have finalised their Code of Practice on Settlement Agreements, and the text can be found in Appendix A of the Draft Code of Practice on Settlement Agreements.  This will give employers some guidance as to how to approach such negotiations in order to gain this additional protection.

But how does pre-termination negotiation protection differ from “without prejudice” protection?  Both will still exist after 29th July 2013 and will run in tandem.  The “without prejudice” principle applies only where there is a genuine attempt to resolve an existing dispute.  The pre-termination negotiation principle will extend this and will apply even if there is no existing dispute.

It is important for employers to note that in order to be protected, pre-termination negotiations must:

  • Apply only to normal unfair dismissal claims.  This protection does not apply to other claims such as discrimination, breach of contract, whistleblowing and automatic unfair dismissal claims (such as dismissal due to a TUPE transfer).
  • Not relate to anything which in the Tribunal’s opinion is “improper”.  If a Tribunal finds that behaviour is “improper” then evidence of pre-termination negotiations may be admissible.  I would take a common sense approach to this but more guidance will be produced by Acas and will become clear as cases go through the Tribunal system on this point.

It is important for employers not to see this as giving them carte blanche to deal with the breakdown of an employment relationship insensitively. But it certainly should allow more flexibility when dealing with traditionally tricky situations.

Employment law changes later in 2013

Now we all know that it is all too easy to get caught up in the moment with the flourish of changes that are imminently approaching.  However, it is also important to keep one eye on the horizon to see what changes may be creeping up on us in the future.

So, what changes are still to come later in 2013?

Early Conciliation

Early Conciliation means that members of staff or former members of staff, who want to bring a claim at the Employment Tribunal will need to notify Acas of their intention to do so before they submit their claim.  This will be done by them completing an online form and the effect of this is to put their 3 month limitation period to submit their claim on hold.

This will then “stop the clock” for up to one calendar month (with a further 2 weeks extension possible if required) and allows conciliation to take place.  Conciliation will be facilitated by an Acas Conciliator in a similar way to how voluntary pre-claim conciliation works already.

Whilst the Claimant must notify Acas of their intention to make a claim before they submit their claim to the tribunal it is not compulsory for the parties to actually engage with Acas or take an active part in any conciliation.  Coupled with the introduction of fees for submitting claims to the Tribunal my view is that it is likely that many employers will choose simply not to engage in early stage conciliation and instead insist that the Claimant “puts their money where their mouth is!”

It is expected that Early Conciliation will be implemented as of April 2013.  However, I have been told by Acas that this is their “long-stop” date and it is entirely possible that Early Conciliation could come into force before then.  Watch this space and I will, of course, send you an e-shot update as soon as we receive any concrete news on this.

Compensatory award limits

Since 25th June 2013, the Secretary of State has had the power to make new caps to the compensatory award for unfair dismissal purposes.  No new caps have yet been implemented but it is anticipated that over the next couple of months there will be a new maximum applied to the compensatory award, which will be the lower of:

  • £74,200 (which is the current maximum); or
  • 52 weeks’ pay.

When implemented this should be employer-friendly.  The average award for this in practice is only around £5,000 in any event but it should put the employer in a stronger position in relation to negotiations, whether before a dismissal has taken effect or after a claim has been brought.

Removal of third-party harassment

There is a right for employees under the Equality Act 2010 not to be subjected to harassment by a third party.  They can bring a claim against their employer for this.  These provisions are going to be removed and it is anticipated that this will occur from October 2013.

Employee-shareholder status

This will introduce a new type of employee ownership arrangement.  Under this arrangement, an employee could agree to give up certain employment rights in exchange for shares in their employer.

The employer must allot at least £2,000 worth of shares to the employee.

An employee shareholder would have the same rights as an employee, apart from the following:

  1. No right to request time off for study or training.
  2. No right to make a flexible working request, aside from those employee shareholders returning from parental leave who may be able to make a request under certain circumstances.
  3. No right not to be unfairly dismissed (except in health and safety cases, automatically unfair cases, or cases where the dismissal is discriminatory under the Equality Act 2010).
  4. No right to a statutory redundancy payment.
  5. The employee must give 16 weeks’ notice if they want to return early from statutory maternity, adoption or additional paternity leave.

In order to ensure a level playing field a number of other provisions are also expected to come into force:

  1. Protections from dismissal or other detriment for existing employees who refuse to become employee shareholders.
  2. Jobseeker’s allowance cannot be withdrawn if an employee shareholder job is refused.
  3. An offer of employee shareholder status must include a statement explaining the employment rights that would be sacrificed and the rights attaching to the shares.
  4. The individual must receive advice about the offer from an independent legal advisor. The employer must meet reasonable costs incurred in receiving this advice, regardless of whether the offer is accepted.
  5. Individuals agreeing to the offer will be entitled to a seven-day “cooling off” period from the day legal advice is received.

These changes are expected to come into force at the end of summer 2013 around 1 September 2013.  We will have to wait and see what the uptake is on these but in my view, the system seems fairly complex and this may scare a number of employers and employees from utilising this provision.

How will you handle these changes?

A lot of changes are happening in 2013.  In the main, they are aimed at removing a lot of the red tape that has been tying employers up in knots for a number of years.

As a result, it is a challenging year and you might have to put more efforts into your employment issues and arrangements over the next few months.

So if you want advice and assistance on any part of employment law, including how changes to legislation may affect your business, please contact the team on 01332 226149 for confidential advice.

As employment law changes frequently our Employment & HR team will also keep sending regular updates on the changes that are on the table and come into force. So you should find these useful for keeping abreast of where you stand with your employee rights and risks. For more information, please contact our Employment & HR team on 01332 340 211.


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