Changes to Employment Claims Start to Bite

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1 August 2013 Changes to Employment Claims Start to Bite The Enterprise and Regulatory Reform Act 2013 (ERRA) received Royal related measures. The Government has also made other changes to Employment Tribunal claims. Many of the measures have yet to come into force as they require secondary legislation. This article provides a brief overview of present and future changes, many of which are designed to reduce the number of claims, which will inevitably result in fewer meritorious claims of the most vulnerable and less well-off being brought and more exploitation remaining unchecked.

2 Provisions of the ERRA which took effect on or before 25th June 2013 Whistleblowing Reforms Restrictions on ACAS disclosure The Enterprise and Regulatory Reform Act makes several key amendments to the law on whistleblowing. Sections of the ERRA introduce a number of changes to the whistleblowing provisions in the Employment Rights Act (ERA) which protect employees from dismissal and detriment in case of a protected disclosure. disclosure. Disclosure will no longer be protected unless the worker or employee has a reasonable belief that disclosure is in the public interest. Under Section 18 disclosures no longer have to be made in good faith. However, if a disclosure is made in bad faith then tribunals can reduce compensation by up to 25%. Under Section 19 the employer is now vicariously liable for the actions of workers who subject a colleague to any kind of detriment as a result of having blown the whistle unless they can demonstrate they took all reasonable steps to prevent this happening. Section 20 also gives the Secretary of State the power to protected under the whistleblowing provisions. whistleblowing provisions in Section 43K of the ERA 1996 affording protection to certain NHS contractors Dismissal for political opinions Section 13 of the ERRA amends Section 108 of the Employment Rights Act 1996 so that the two year qualifying period for unfair dismissal claims does not apply where the alleged reason (or principal reason) The Government inserted Section 13 following the European Court of Human Rights (ECHR) decision in Redfearn v United Kingdom 2013 IRLR 51 ECtHR where the ECHR found that UK is in breach of Article 11 European Convention on Human Rights in not providing a remedy for employees who were dismissed on political grounds and who did not have the necessary qualifying service (two years) to bring an unfair dismissal claim. Section 10 of the ERRA inserts a new Section 251B into the Trade Union and Labour Relations (Consolidation) Act 1992 (TULCR(C)A) which prohibits the disclosure of information held by ACAS relating to a worker, employer of a worker, or a trade union. The amendment is due to the introduction of mandatory early conciliation. Breach of Section 251B is a criminal the standard scale (currently 5000). Section 251B (2) allows for certain exceptions in order to allow ACAS to perform its functions effectively. Changes to EAT composition The Act makes provision under the new Section 28 (2)-(7) Employment Tribunals Act 1996 (ETA) for the Employment Appeal Tribunal to be composed, by default, of a single judge. Only the judge and the Secretary of State may direct that particular appointed members. The Government s reason for this appeals on a point of law. Tribunal orders Section 21 of the ERRA amends Section 9 ETA to enable the Secretary of State to make regulations giving Tribunals the power to make a deposit order or response (rather than in respect of the entire proceedings or response under the previous system). Section 21 of the ERRA also amends Section 13A of ETA to enable an Employment Tribunal to make an order for payment of witness expenses where it has also made a preparation time order against the same party which was not possible under the previous rules. Annual adjustment of statutory limits Section 22 amends Section 34 of the Employment Relations Act 1999 so that changes to various statutory limits will be made on 6 April each year. Though the limits remain linked to the Retail Prices Index, the limits are rounded up to the nearest pound.

3 Other Provisions which came into effect on 29 July 2013 Employment Tribunal Fees The Government has used a power it already had to introduce fees for Employment Tribunal claims. Claimants are now required to pay a fee in order to lodge an Employment Tribunal claim and a further fee will be payable in order for the claim to proceed to a hearing. Any claims made before this date will not attract any fees. The fees that apply are as follows: Type A claims (unlawful deductions from pay, notice, pay, refusal to allow time off /holiday pay and redundancy pay) will cost 160 to lodge the claim and 230 for the hearing. Type B Claims (unfair dismissal and discrimination) will cost 250 to lodge the claim and 950 for the hearing. Different fees apply for multiple claims To take an appeal to the Employment Appeal Tribunal the fees are 400 to lodge and 1,200 for the hearing. A fee remission system will operate for those who monthly income below a certain level. If a claimant submits a claim accompanied by an application for remission and the remission application otherwise the Tribunal will reject the claim if not paid by that date. It is possible to apply for the claim to be re-instated, (provided this application is lodged with the tribunal fee / a remission application) but this may or may not be successful. Tribunals will also have discretion as to when the hearing fee is payable. A legal challenge has been made in relation to the introduction of fees, but pending this, fees must still be paid. Should the legal challenge be successful HM Courts & Tribunals Service will reimburse any fees that have been made. The Employment Tribunal now have the power to order unsuccessful party to reimburse the fees paid by the successful party.

4 New Employment Tribunal Rules Changes to Compromise Agreements The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 (the Rules) are a result of Lord Justice Underhill s review of the previous rules. They apply to any claims made on or after 29 July The overriding objective of the Rules, which underpins all procedural decisions relating to a claim, has been changed. The objective is still to deal with cases fairly and justly but the previous objective within that to ensure that the claim is dealt compatible with proper consideration of the issues. The new Rules also state that representatives must assist the Tribunal and co-operate with each other. The Rules make several important changes to the procedure applicable in Employment Tribunals, some of which are listed below:- An initial sift by the Tribunal of both claims and and defences; New ET1 and ET3 forms; ET3 response forms must still be received by the Tribunal within 28 days of receipt by the respondent and by midnight on the 28th day but there is a relaxation of the rules in relation to making an application to extend the deadline to submit a response ET3 (but not the deadline for submitting a claim!); Case management discussions and pre-hearing reviews will be combined into new preliminary hearings; The requirement for respondents to write to the Tribunal for a claim to be dismissed once a claimant has withdrawn the claim is removed; The procedure for making interlocutory applications is relaxed. Rule 4 is maintained so claims will be rejected if the ET1 does not contain each claimant s name and address; and each respondent s name and address and if the ET1 claim is not accompanied by a fee or remission application. (If the remission application is rejected or accepted in part or only part of the fee is paid the tribunal will write to the party stating that if the claim will be rejected.) Claimants can still re-lodge claims with a fee payment / remission application but there will obviously be problems if limitation expires in the meantime. accompany this name change ACAS is issuing a statutory Code of practice and non-statutory guidance. The revised draft of the Code, which is described as a attached to the consultation paper. The key changes are: The Code has been renamed the Code of Practice on Settlement Agreements (under Section 111A of the Employment Rights Act 1996). A paragraph has been introduced setting out the statutory requirements for valid settlement agreements, under Section 203(3) of the ERA The recommendation that initial settlement offers be made in writing has been removed. Employers will be free to choose how to make the initial offer, but the Code now emphasises The recommended minimum period for consideration of a settlement offer has been increased from seven to ten calendar days, but this is no longer a mandatory period, and parties can agree on another reasonable period. A recommendation has been added that employees be allowed to be accompanied at settlement agreement discussions by a work colleague or trade union representative. This is expressly stated to be good practice rather than a legal entitlement. The list of improper behaviours for the termination negotiation (see below) has been expanded to include all forms of victimisation and harassment. The parts of the Code dealing with the interaction with the without prejudice principle have been expanded. The template letters have been removed from the Code; templates will instead be included in the non-statutory guidance accompanying the

5 negotiation in Section 14 of the ERRA came into force on 29 July Section 14 ERRA inserts Section 111A into the ERRA allowing employers and employees negotiations with a view to terminating an employee s contract on agreed terms. Such discussions, will not be admissible as evidence in any subsequent unfair dismissal proceedings. There are three exceptions to this general rule: Section 111A (3) automatically unfair dismissal (breach of contract, discrimination) employer Section 111A (5) employer may reserve the right to refer to the settlement offer for the purposes of any tribunal determination on costs or expenses. The new ACAS Statutory Code of Practice on Settlement Agreements also gives guidance on how to handle pre-termination negotiations and includes behaiour, i.e. Harassment, discrimination and undue pressure to name a few. Please see link below. Access this link for a copy of the Draft Code: Agreements-Code-June-2013.pdf

6 Provisions of ERRA coming into force on 1st October 2013 via commencement order Section 65 removes subsections (2) (4) from Section 40 of the Equality Act (employer s liability for third-party harassment). The Government took the view that these provision were not necessary and that employees are already adequately protected by the law. Their repeal means that an employer s liability for third-party harassment will be governed by the Equality Act s general provisions on harassment and previous case law. However, if an employer knows that a customer has repeatedly harassed an employee but has not taken reasonable steps to prevent then they will l continue to be held liable. Removing strict liability for breach of health and safety Section 69 amends Section 47 of the Health and Safety at Work etc Act 1974 to remove the right to bring a civil claim for breach of a statutory duty under various health and safety legislation. Employer will no longer incur any strict liability should an employee suffer damages as result of such breach unless one of the exceptions under Section 47 (2A) applies. The employee s only recourse will be bring a negligence claim. Abolition of Agriculture Wages Board Section 72 and Schedule 20 abolish the Agriculture Wages Board for England and Wales and the Agricultural Wages Committees and Agricultural Dwelling-House Advisory Committees in England. These Sections abolish the agricultural minimum wage and The National Minimum Wage Act 1998 is amended to bring agricultural workers in England and Wales within the scope of the Act. BIS has indicated that the current Agricultural Wages Order (England and Wales) 2012 will remain in place until 1 October Section 72 and Schedule 20 (remaining provisions): abolition of the Agricultural Wages Committees and Agricultural Dwelling-House Advisory Committees in England are expected to come into force at the beginning of November.

7 Provisions of ERRA coming into force on 6 April 2014 via commencement order prospective date April 2014 Removing the questionnaire provisions (Section 66) Subsections 7-9 of the ERRA insert new provisions (Section 18A and 18B) into the ETA under which prospective claimants will be required to contact ACAS before commencing any proceedings. The aim is to promote early conciliation of claims but inevitably this extra required step and the consequential time limit changes will present an additional hurdle to claimants which may result in their claims not being brought. The list of relevant proceedings in which early conciliation is mandatory will be set out in Section 18 (1) ETA. Consultations are currently taking place and according to the Progress on reform. The new rules will not be introduced until spring Section 66 repeals Section 138 Equality Act, which allows a person who thinks they may have been unlawfully discriminated against, harassed or victimised to obtain information from his/her employer by means of a prescribed questionnaire procedure. The Government decided to push ahead with this plan to abolish this notwithstanding that 83% of responses to consultation were opposed to abolition. A court or tribunal can however still draw adverse inferences from a refusal to respond or from evasive answers, despite the lack of any questionnaire provisions. Provisions of the ERRA which came into law on or before 25 June 2013 but which still require secondary legislation to be brought into effect Unfair Dismissal compensation Caste as an aspect of race Section 15 of the ERRA allows the Secretary of State to amend Section 124 of the ERRA to change the maximum compensatory award (currently 74,200) for unfair dismissal claims by way of statutory instrument. The Government intends to use this provision to limit the unfair dismissal compensatory award to the lower of the current cap or one year s gross pay. Section 97 of the ERRA amends Section 9 (5) of the Equality Act so that it compels the Government to silent as to when can this power must be used. Section 9(5) makes Section 97 subject to review and warned that it may take 1 to 2 years before caste discrimination legislation is in force.

8 What the future holds Financial penalties for employers Section 16 of the ERRA inserts Section 12A into the ETA, giving tribunals found to have breached a claimant s employment rights if it is found that Explanatory Notes to the Act state that an aggravating factor will most likely be when: The action is deliberate or committed with malice; Employer was an organisation with a dedicated human resources team, or Employer has repeatedly breached the employment right concerned. But will not apply when: The employer has been in operation for only a short period of time Is a micro business Has only a limited human resources function The mistake was genuine. Other characteristics: it still has the discretion to decide whether or not to impose a penalty. Section 12A (2) tribunal must have regard to an employer s Section 111A(3) award ranges from 100 to 5,000 If claimant has been awarded compensation, any penalty must be half that amount, subject to the levels prescribed in Section 111A (3) (5). Section 12A(7) applies to penalties made in multiple claims, in which the employment tribunal will also have a discretion as to the employer no more than 50% of that amount will be awarded. imposed by the tribunal where one single act by an employer leads to multiple claims by a worker. Lastly, if the employer pays 50% of the penalty within 21 days of sending the penalty notice, its liability for the full amount is discharged. There is not yet a commencement date for these changes but the Government has indicated it will not be implemented until April Employment Department Contacts: Linda Stewart linda.stewart@simpsonmillar.co.uk Asha Wije asha.wije@simpsonmillar.co.uk Joy Drummond joy.drummond@simpsonmillar.co.uk Rachel Blythe rachel.blythe@simpsonmillar.co.uk Marianne Haworth marianne.haworth@simpsonmillar.co.uk Susan Lemmon susan.lemmon@simpsonmillar.co.uk 27 St Pauls Street, LEEDS, LS1 2JG Tel: Fax: Trafford House, Chester Road, Stretford, MANCHESTER, M23 0RS Tel: Fax: Sycamore House, 5 Sycamore Street, LONDON, EC1Y 0SG Tel: Fax: Summer Lane, BIRMINGHAM, B19 3TH Tel: Fax: Church Road, Lawrence Hill, BRISTOL, BS5 9JA Tel: Fax: Cowbridge Road East, CARDIFF, CF5 1JB Tel: Fax: The Broadway, WIMBLEDON, London, SW19 1NE Tel: Fax: Commercial Union House, 39 Pilgrim Street, NEWCASTLE, NE1 6QW Tel: Fax: Velocity House Business & Conference Centre, Suite 8, 3 Solly Street, SHEFFIELD, S1 4DE Tel: Fax: Suite 47/48, Oriel Chambers, 14 Water Street, LIVERPOOL, L2 8TD Section 11 ERRA amends section 4 of the ETA 1996 to provide that made by SOS and the Lord Chancellor. Any such order will be subject to Calls may be charged and costs may vary depending on your service provider. Simpson Millar Solicitors LLP This newsletter contains information on current legal issues applicable at the time of printing. Note there may have been changes subsequently have not been incorporated in to this material. This newsletter is intended for information purposes only and its content should not be applied to any particular set of facts or relied upon without legal or other professional advice. Simpson Millar are a