BHW Employment Law

NewsletterSummer 2013

Welcome to the Summer 2013 edition of the BHW Employment Law Newsletter.

The Government has introduced several key reforms and amendments in employment law over the last few months.

One of the most signifi cant changes is the introduction of fees in the Employment Tribunal. The new fee structure, which came into force on 29th July 2013 is a positive change for employers. For more information on this please read our feature article at page 4.

‘Protected conversations’, introduced as ‘Confi dential Pre-Termination Negotiations’ can now be used when bringing an employment relationship to an end. How will this work in practice? Turn to page 5 for more information.

Page 6 of this issue covers the new employment status of Employee Shareholders.

The Agricultural Wages Board (AWB) has now been abolished but what does this mean for those employing staff in this sector? Page 7 of this issue covers life after the AWB.

Finally, we take a look at what is to come in 2013 at page 8 with our Legislation Timetable.

If you have any questions relating to the articles featured in the Newsletter or would like advice on a particular query you may have, please do not hesitate to contact me to discuss further.

Laura AllansonHead of Employment0116 281 6237 laura@bhwsolicitors.com

Inside this issueChanges in Employment Law 3

It will now cost an employee to bring a claim against you Introduction of fees in the Employment Tribunal 4

Managing staff without the threat of legal proceedings 5

Employee Shareholders 6

Life after the Agricultural Wages Board 7

Legislation update 8

BHW Employment Law

Newsletter

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Changes in Employment LawWhistleblowingThe Employment Rights Act 1996 was amended to refl ect the fact that a disclosure will only be protected if the employee reasonably believes that the disclosure is made in the public interest. In addition, a disclosure will no longer have to be made in good faith.

It is important to ensure that your Whistleblowing Policy covers protected disclosures made “in the public interest”.

From 25th June 2013, a “qualifying disclosure” means any disclosure of information that, in the reasonable belief of the worker, is made in the public interest. Employers are advised to amend the relevant section of the existing Whistleblowing Policy that explains explains what constitutes a protected disclosure.

Unfair Dismissal Compensatory AwardAt present unfair dismissal awards are made up of a statutory basic award and a compensatory award. The basic award is essentially what an employee would receive if they were made redundant.

Since Monday 29th July 2013 the compensatory award in most types of unfair dismissal cases has been capped at 52 weeks’ pay or £74,200, whichever is lower.

This cap only applies to employees who were dismissed on or after 29th July 2013.

The calculation of a years’ pay will be based on the statutory defi nition of “a weeks’ pay”. Basically this means the gross salary fi gure (i.e. before tax and National Insurance Contributions) however, pension contributions, benefi ts-in-kind and discretionary bonuses will be excluded.

The Department for Business Innovations and Skills (BIS) has indicated that the median will be somewhere between £26,000 and £78,000.

There will also be new rules on interest which will mean that interest will accrue on tribunal awards from day one, unless they are paid in full within 14 days.

Employment Appeal Tribunal procedureThe composition of the Employment Appeal Tribunal will change to one judge sitting alone to hear appeals.

Unfair dismissal and political opinion The reforms introduced by the Enterprise and Regulatory Reform Act 2013 have removed the two-year qualifying period for unfair dismissal protection where the main reason for the dismissal is the employee’s political opinions or affi liations. It is not intended to be a new basis for discrimination or an automatic unfair dismissal claim. The fairness of the dismissal will be based on whether the employer followed a fair procedure on the grounds of some other substantial reason.

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When employment tribunals were created in the 1960s, legal representation was discouraged. The focus was on providing a free service for employees who felt they were being treated unfairly in the work place.

What went wrong?The difficulty came with the increasingly complex case law which created uncertainty around people’s rights. Employers felt that they were being put to unnecessary expense defending groundless claims which were sometimes more cost effective to settle than run to hearing. This was particularly the case where employees were not legally represented.

To try and redress this the coalition government announced in 2011 that it would introduce fees for people wishing to bring a claim in the employment tribunals and the

Employment Appeal Tribunal. As always, there was a cost saving element to the reforms as the government wanted people who used the service to cover more of the cost of running it.

So what will happen?

From Monday 29th July 2013, employees will be asked to pay two fees. The first fee will be called the issue fee and must be paid when the claim form (ET1) is lodged with the Tribunal. The second is a hearing fee; this will be due 4 -6 weeks before the hearing. How much this fee will be depends on the type of claim.

How much will it cost?

Claims will be placed in one of two categories. Type A is for the more straightforward claims such as failure to pay entitlements under an employee’s contract e.g. holiday pay, notice pay etc. Such claims will attract a £160 issue fee and a £230 hearing fee. Type B is likely to be more

common as it covers claims for unfair dismissal, discrimination and equal pay. Type B claims will attract a £250 issue fee and a £950 hearing fee.

Claims involving multiple employees (known as group action claims) will attract a group fee which is divided between the group.

Can this be stopped? Unsurprisingly, the Unions feel that the introduction of fees is unfair. UNISON and Fox and Partners have therefore applied for judicial review of the decision stating that the fees prevent employees exercising the rights given to them by law. On 9th July 2013, Fox’s application for an interim interdict (injunction) was rejected. However, the matter has been set for a full hearing which is expected later this year. The Ministry of Justice have agreed that if the decision goes against them, they will repay any money which has been received. So can this be stopped, who knows!

It will now cost an employee to bring a claim against youIntroduction of fees in the Employment Tribunal

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Compromise Agreements were re-named Settlement Agreements on 29th July 2013. So apart from the name, what’s the difference?

Under the Enterprise and Regulatory Reform Act 2013, employers and employees will be expected to have confi dential pre-termination negotiations (protected conversations) to bring employment to an end. The idea is to allow employers to effectively manage their workforce, without the threat of legal proceedings. Of particular note is the fact that when an offer of a settlement agreement is made to an employee, they will not be able to disclose this fact to an Employment Tribunal should they decide to reject the offer and pursue a claim for unfair dismissal.

What protection has been built into the Bill to protect employees?

Essentially, only discrimination or evidence of ‘improper behaviour’ will be suffi cient to enable an employee to bring the offer of a settlement agreement to the Tribunal’s attention.

There is no specifi c guidance on what ‘improper behaviour’ would be, but ACAS have issued a draft code which sets out some fairly straight forward advice on the matter. One of the recommendations they make is to give an employee 7 days to consider a potential settlement offer. This should give the employee suffi cient time to seek independent legal advice before accepting/rejecting the offer.

What about from the employer’s perspective?

The change was put forward by business secretary Vince Cable to try and make sure ‘that the right conditions are in place to encourage investment and exports, boost enterprise, support green growth and build a responsible business culture.’ It could be argued that the changes bring about a refreshingly honest approach to terminating employees contracts. However, practitioners are concerned about

how protected conversations will work in reality. Until the provisions have been fully tested, we do not know what is meant by ‘improper behaviour’. The consequences of falling foul of this provision will be to make conversations in relation to the settlement agreement admissible in a subsequent Employment Tribunal.

Verdict

In theory the new regime should make it easier for employers to manage their workforce. However, our advice would be to proceed with caution. This is because the term ‘improper behaviour’ has not yet been fully defi ned. An employer could therefore fi nd themselves in a situation where an employee who refuses to sign a Settlement Agreement, could submit the contents of their negotiations and the draft agreement as evidence against them in any subsequent Tribunal claim.

Managing staff without the threat of legal proceedings

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Employee ShareholdersA new type of employment status will be created under the Growth and Infrastructure Act 2013 (Commencement No. 3 and Savings) Order 2013, which came into force on 1st September 2011. The status of employee shareholder will allow employees to give a bundle of employment rights (e.g. unfair dismissal and statutory redundancy) in exchange for an award of shares worth at least £2,000.

The employee will have a right to a statement detailing the shares, a requirement for the employee to take legal advice (the employer will pay for this up to a “reasonable” level) and a seven day cooling off period.

What does this mean for employers?

The practical impact of these changes is unclear.

Any company with share capital can enter into an agreement with an employee to allow them to become an “employee shareholder”.

An employee shareholder will receive fully paid-up company shares that have a value of no less than £2,000 on the day of issue.

In exchange for these shares the employee shareholder will give up the right to:

training;

it breaches the Equality Act 2010, or breaches H&S legislation or is automatically unfair under ERA); and

If an employee shareholder goes on maternity, paternity, adoption or parental leave the notice that they will need to give to return to work will increase to 16 weeks.

Employers will be able to make a job offer conditional on an applicant agreeing to become an employee shareholder. If an applicant refuses the employer can lawfully withdraw the offer.

The statement that the employer must provide the employee shareholder with must contain the following:

shareholder is giving up;

e.g. voting and dividend;

on the transfer of the shares; and

subject to drag-along or tag-along rights.

The employee must not suffer a detriment for refusing to accept the offer to become an employee shareholder.

It is not clear how the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) 2006 will apply to employee shareholders or indeed existing Share Scheme arrangements.

Employers will also need to be careful that the introduction of employee shareholders in their company does not create a two-tier workforce of employee shareholders and non-employee shareholders.

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The current AWO 2012 will remain in force until 1st October 2013.From 1st October 2013 employers will be free to engage new workers on terms and conditions that comply with national legislation, e.g. the Working Time Regulations (WTR) 1998 and the National Minimum Wage (NMW) Act 1998.

What does this mean for employers?

Employers will need to consider the terms and conditions of existing employees and that of new recruits. Before considering making any changes employers may wish to consider the following:

salaries. From 1st October 2013 it will be easier for employers to design salaries as long as they comply with the NMW.

AWO 2012 grade 1 -6 apply for employees employed before 1st October 2013. For employees taken on after 1st October 2013 the National Minimum Wage (NMW) applies.

currently fi xed by the grade as set out in the AWO 2012. There is no statutory provision for overtime to be paid at a higher rate. Therefore after 1st October 2013 employers will not be required to pay overtime for new employees.

employed before 1st October 2013 the hourly pay must not be below the minimum hourly rate for the grade as set out in the AWO 2012. Employers must calculate and pay a ‘fair’ piece rate which is the same rate as the NMW for a worker taken on after 1st October 2013.

(ASP) is payable to employees after after 12 months service and is paid at the minimum rate for their grade under the AWO 2012. For employees taken on after 1st October 2013 Statutory Sick Pay (SSP) is payable if the employee meets eligibility requirements.

are expressly defi ned in the AWO 2012 and calculated on the number of days worked each week (e.g. 5 days per week = 31 days per year, including bank holidays.) There are rules on how much holiday can be carried over from year to year and how much can be bought out etc. For employees taken on after 1st October 2013 the current statutory holiday entitlement of 5.6 weeks pa (e.g. 5 days per week = 28 days inclusive of bank holidays.)

overtime rate (1.5 x hourly rate) applies if an employee works on a bank holiday. For new employees taken on after 1st October 2013 there is no statutory requirement to pay overtime rate if an employee works on a bank holiday.

maximum deductible is set out in the AWO 21012 and subject to the NMW Regulations and the worker having worked a minimum of 15 hours in any particular week. The offset rate for accommodation charges £4.91 per day (from 1st October 2013). If an employer charges more than this, the difference is taken off the worker’s pay. No 15 hour minimum applies.

Life after the Agricultural Wages Board (AWB)The Agricultural Wages Board (AWB) which determines the Agricultural Wages Order (AWO) in England and Wales was abolished on 25th June 2013.

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The content of our Newsletter is provided for general information purposes only and does not constitute legal or other professional advice. This fi rm is authorised and regulated by the Solicitors Regulation Authority - SRA number 383490

We have developed the BHW Employer Support and Protection Schemes to support and protect employers of all sizes with their employment needs. If you would like more information on the schemes please contact Laura Allanson on 0116 281 6237 or email laura@bhwsolicitors.com or Katie Stephenson on 0116 281 6227 or email katies@bhwsolicitors.com

2013;

(Protection of Employment) Regulations

Financial penalties will be imposed on

brought in under the Children and Families Bill 2012-13;

2014;

order an employer to carry out an equal pay

Legislation update