Employment law changes for 2014 what do they mean for your business?

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1 Employment law changes for 2014 what do they mean for your business? Employment law has constantly changed and evolved over the last number of years. This year marks a number of further changes including major changes to the ACAS conciliation procedure and the introduction of financial penalties for employers who lose at a tribunal. Employers should also be aware of changes to flexible working and TUPE legislation. The government has also introduced plans to assist companies in dealing with employees who are undergoing long-term periods of absence. This article provides an overview of these developments and looks at how they are likely to impact on your business. Author: David Hession, employment law solicitor at Grindeys. In order to manage your workforce effectively and protect your Company against claims from your employees it is important for employers to keep on top of any current developments. By acting in a way that is unlawful, employers can expose themselves to the risk of costly and time-consuming litigation. It is becoming increasingly more important for employers to know their rights, and their employees rights, from the outset. The new ACAS Conciliation procedure aims to resolve claims before they get to Tribunal Most of you will be aware that the Advisory Conciliation and Arbitration Services (ACAS) consolidate and resolve potential disputes between employers and employees. The introduction of mandatory early conciliation will significantly change the way in which ACAS will attempt to resolve employment disputes. Under the old regulations, there were no requirements on employees to attempt to reach a settlement before issuing a claim. From 06 th May 2014, employees are required to refer (on a mandatory basis) any potential employment claims to ACAS before issuing a claim against their employer. This process is referred to as early conciliation. The new process will commence with a prospective claimant sending information to ACAS which will include the contact details of the respective parties. At this stage, the employee is not required to go into any details about the precise nature of their potential claim. ACAS will nominate an Early Conciliation Support Officer (ECSO) to deal with each case. If the employee indicates that they wish to settle their potential claim, ACAS will then appoint a conciliator. Where both parties indicate that they wish to settle, the conciliator will have up to one month (from the

2 date of receipt of the early conciliation form) to bring about a settlement. This settlement period can be extended by a further period of two weeks if the conciliator feels that there is a reasonable prospect of settlement. If the conciliation officer concludes that settlement is not possible during the conciliation period then a relevant certificate will be issued. If a settlement is concluded then ACAS will draw up an agreement recording the terms of settlement. Claimants will be required to produce evidence to demonstrate that the have been through the early conciliation process. Should they fail to do so; the employment tribunal will reject their claim. Employers should be aware that this new process will not prevent ACAS from attempting to settle employment law claims once they have been issued through the tribunal. An ACAS officer can still attempt to settle case where both parties request it or they consider that there is a reasonable prospect of successfully negotiating a settlement. The introduction of financial penalties for employers who lose at tribunal Employers should be aware of the potential financial sanctions that they could face if a successful claim is brought against them at tribunal. For instance, employees who are successful in bringing unfair dismissal claims could be entitled to a basic award calculated on their length of service and gross weekly earnings which could result in a substantial payout. In addition, tribunals can also award employees compensation based on their loss of earnings. This is currently capped at the lower of 76, 574 or one year s salary. Successful discrimination cases can, in certain circumstances, result in unlimited loss of earnings being awarded to claimants. From April of this year the financial implications of losing at tribunal could increase. The government has now empowered the courts to issue financial penalties against employers who lose at tribunals. These penalties are applied on a discretionary basis and are payable to the Exchequer rather than employees directly. Penalties will be levied where the tribunal considers an employer s breach to have one or more aggravating features. The minimum amount of the penalty will be 100 whereas the maximum amount is 5,000. They can be imposed on employers even in circumstances where a financial award has not been made to the claimant (some cases can result in a nil award even if the employer has lost). Where a financial award is provided to the claimant, the penalty must be 50% of the amount of the award (subject to the cap of 5,000). The employer s ability to pay the award will also be taken into account. Employers will also be entitled to a 50% reduction on the financial penalty if it is paid within 21 days of the date on which the decision has been sent to the employer by the tribunal.

3 The right to request flexible working is extended to every employee Under current employment legislation those employees who submit a flexible working request must have child caring responsibilities. More specifically, they must have a child who is under 17 years old or 18 in circumstances where the child is disabled. Prior to new legislation which came into effect this year, employers had to follow a strict statutory procedure when an employee submitted a request for flexible working. For instance, an employer would be required to hold a meeting with the employee within 28 days of the request being made. There are further timeframes in that employees must be notified of any decisions within a defined period. If a request is refused then an employee should be given the right to appeal this decision. Employers who were not able to comply with a flexible working request should to be able to justify this. The Children and Families Act 2014 extends the right to make a flexible working request to all employees. Companies should still be mindful that employees are still required to have 26 weeks continuous service before a request can be made. Employees are only allowed to make one application within a 12 month period. Companies who accept a flexible working request should also be aware that once a request is accepted, this will become a permanent variation of the employee s contract. Should an employer want an employee to change their hours of work after this period then they would require the employee s consent a general rule. Employers are still advised to ensure that they have a solid business case when informing an employee that their request has been rejected. In addition, the statutory framework for dealing with a request will be abolished under the new legislation. Most employers will breathe a sigh of relief as the previous statutory timeframes were stringent in nature. Going forward, businesses will be expected to consider any requests reasonably. ACAS have published a guide which assists employees in dealing with flexible working requests. This guide is available from their website. Introduction of a Health and Work Assessment and Advisory Service Employers are often faced with the common problem of having to deal with an employee who has been off on long-term sickness absence. A similar problem can exist with those companies who have to deal with employee who undergo regular intermittent periods of absence. Numerous questions can arise in the course of managing employees through a course of absence management. A question

4 often arises as to how long companies have to wait before they consider dismissing an employee on grounds of long-term ill-health. The government has announced that it will set up a new Health and Work Service. At the time of writing, the exact dates for the implementation of this service have yet to be finalised. It is intended that the service will provide assistance to employers, employees and GPs to ensure that those employees with a health condition return to work. The service will consist of two elements. The first stage consists of an assessment where employees who have reached 4 weeks of sickness absence will normally be referred by their GP for an assessment by an occupational health professional. Following an assessment, employees will receive a return to work plan with recommendations which assist them in returning to work. Employees will also be case managed to ensure that their own specific needs are correctly identified. Following the first stage, employers, employees and GPs will be able to access advice through a phone line and advice service. Changes to Transfer of Undertakings Regulations ( TUPE ) The TUPE regulations provide protection to employees in circumstances where a business changes hands. TUPE situations can arise where there has been a transfer of assets or a service provision change. This provision change can typically occur where services provided by businesses are outsourced or in-sourced. This area of law is notoriously technical and companies would be well advised to seek legal advice if they do have any queries in this area. A number of changes to the regulations were implemented on 31 January on this year. The main changes are:- 1. Dismissals made in connection with a change in business ownership can be deemed automatically unfair. A new employer will have a defence to this type of claim if they can demonstrate the dismissal is for an economic, technical or organisational ( ETO ) reason entailing a change in the workforce. For instance, a new employer may decide to undertake a restructuring exercise to reduce staffing costs. This could potentially amount to an ETO defence. Under the amended regulations, the definition of ETO will be extended to specifically refer to a change in the location of the workforce. Companies who are shutting down one of their outlets or offices in a TUPE situation will be able to defend any claims for automatic unfair dismissal; 2. In circumstances where employees transfer between companies, the old employer is obliged to provide the new employer with employee liability information. This usually comprises of contracts of employment and any company policies or procedures. Under the old regulations this information only had to be provided within 14 days of the transfer. This represented an obvious

5 problem for companies in that employee information only had to be made available at a very late stage in the day. The new regulations have sought to address this potential issue for employers taking on new staff as a result of the TUPE regulations. The timeframe has no been extended so that any liability information must now be given at least 28 days prior to the transfer; and 3. Employers seeking to make large-scale redundancies are faced with minimum timescales to consult their employees. These timescales currently stand at 30 days in cases where the employer proposes that 20 or more dismissals will take effect within a period of 90 days or less. For these purposes a dismissal takes effect on the date at which the employment contract comes to an end. This increases to 45 days where employers are proposing to make 100 or more redundancies. Proposed redundancies can often arise within a TUPE context. When faced with an influx of new employees, a company will often seek to restrict staff expenditure by reducing the workforce after the point of transfer. The new TUPE regulations will enable pre-transfer consultation to count for the purposes of complying with the collective redundancy rules. This is provided that the old employer and new employer both agree. The transferee must also conduct meaningful consultation. This article is not intended to constitute legal advice and specialist advice should be sought in individual cases. Should you require any further employment law updates, please do not hesitate to contact a member of the Grindeys team. T: E: W:

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