In this update we summarise some of the new legislation due to come into force over the next year and review some recent decisions from the Courts.

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1 Page 1 Employment bulletin June In this update we summarise some of the new legislation due to come into force over the next year and review some recent decisions from the Courts. Legislation update As most of you will be aware, the Enterprise and Regulatory Reform Act ("the ERRA ") was passed on 25 April. Some employment-related provisions of the Act came into force on that date; some will come into force on 25 June ; and others will come into force on dates to be confirmed. In addition, the Government intends to introduce several other employment-related provisions. Set out below is a timetable of some of the expected changes over the next year or so: When 25 April Development The Enterprise and Regulatory Reform Act (ERRA ) received Royal Assent. The following provisions of ERRA were implemented on the same date: Except in certain circumstances, ACAS are prohibited from disclosing information relating to a worker, employer or trade union held by ACAS in connection with the provision of ACAS services (s.10 ERRA ). The Government has the power to legislate to give tribunals the power to order an equal pay audit (s.98 ERRA ). 25 April 25 April 17 June The Crime and Courts Act received Royal Assent. The Justice and Security Act received Royal Assent. The Disclosure and Barring Service launched a new Update Service allowing DBS certificates to be reused when applying for similar jobs. 25 June Various provisions of the ERRA will come into force including: EAT judges will sit alone (s.12 ERRA). The qualifying period for unfair dismissal will not apply where the main reason for dismissal is the employee's political opinions or affiliation (s.13 ERRA). The government will have the power to vary the unfair dismissal compensatory award limit (s.15 ERRA). Changes to the whistleblowing legislation (ss.17, 18, 19 and 20 ERRA). Reform of the EHRC (s.64 ERRA). The power to legislate to make caste an aspect of race discrimination (s.97 ERRA).

2 Page 2 29 July Fees will be introduced into the Employment Tribunals and EAT. The new Employment Tribunals Rules of Procedure will come into force. Expected Summer Pre-termination negotiations will become inadmissible in unfair dismissal proceedings (s.14 of ERRA ) Renaming compromise agreements as 'settlement agreements' (s.23 ERRA ) The limiting of the compensatory award in an unfair dismissal case to the lower of 74,200 or 52 weeks' pay (under the power conferred by s.15 ERRA ). 1 September The new employee shareholder employment status will come into effect. 1 October New national minimum wage rates take effect. Removal of the third-party harassment provisions from the Equality Act 2010 (s.65. ERRA ) Changes to civil liability for employers who breach health and safety laws (s.69 ERRA ) October Changes to TUPE 2006 are planned to come into force. Expected The Government's response to the annual leave aspects of the Modern Workplaces consultation is expected. 6 April 2014 Mandatory pre-claim ACAS conciliation will be introduced under ERRA. Repeal of the discrimination questionnaire provision in the Equality Act 2010 (s.66 ERRA ) Spring 2014 The right to request flexible working will be extended to all employees who have at least 26 weeks' service under the Children and Families Bill New approach to sickness absence management to be introduced 2015 Introduction of new system of shared parental leave.

3 Page 3 Summer Reforms - detail Whistleblowing The ERRA introduces a number of changes to the current whistleblowing regime including: In the public interest The ERRA will amend the Employment Rights Act 1996, so that qualifying disclosures must in the reasonable belief of the worker be made "in the public interest". This will apply to all the categories of protected disclosure. BIS commented in its press release on 25 April that workers will be prevented from bringing employment tribunal claims for "purely private matters such as problems with their own individual contract". The principal aim behind this amendment was to close the legal loophole created by the case of Parkins v Sodexho Ltd [2002] IRLR 109. This case enabled employees to rely on a disclosure relating to a breach of their own employment contract (being a breach of "a legal obligation"); contrary to the intention of the original legislation. Whilst the theory behind this change might seem simple, we can immediately see potential issues. There is likely to be litigation to decide what constitutes "the public interest". In addition, the public interest requirement will not exclude all claims based on contractual obligations. For example, an individual working in the caring profession might complain that their employer is breaching their employment contract in forcing them to work excessive hours and thus putting members of the public at risk. The Government recognised this conundrum at the committee stage stating that " there are also likely to be instances where a worker should be able to rely on breaches of his own contract where those engage wider public interest issues. In other words, in a worker's complaint about a breach of their contract, the breach in itself might have wider public interest implications". To what extent the new legislation will actually close the loophole remains to be seen. Good faith The ERRA removes the "good faith" requirement for a protected disclosure. However, good faith is not disappearing completely from the whistleblowing legislation. It has been moved from being an issue of liability to an issue of compensation. The amendment will give tribunals a new power to reduce compensation by up to 25% if the disclosure was not made in good faith. Vicarious liability In NHS Manchester v Fecitt and others [2012] IRLR 64 the Court of Appeal held that an employer cannot be vicariously liable under the whistleblowing legislation where an employee victimises a whistleblower colleague. This makes it very difficult for a whistleblower who has been victimised by a colleague to claim redress, even where management have done nothing to stop it. As a result of this case, there has been debate on amendments which introduce personal liability on employees who victimise whistleblowers, and vicarious liability for their employers. These amendments have been approved and now appear in the ERRA. The net effect of this amendment will be to bring whistleblowing claims into line with discrimination law in that those who victimise will be individually liable (subject to relying on a reasonable statement by their employer) and an employer is vicariously liable for its workers who victimise (subject to relying on a defence of having taken all reasonable steps). New Tribunal fees From 29 July, the Government intends to introduce fees into the Employment Tribunal and Employment Appeal Tribunal. In the Employment Tribunal, Claimants will usually have to pay two fees, one when they issue the claim and another if the claim proceeds to a hearing. Set out below are the levels of fees indicated in the draft Order (currently before Parliament):

4 Page 4 Type A Claim Type B Claim Issue fee (in a claim made by a single claimant) Hearing fee (in a claim made by a single claimant) Reconsideration of a default judgment Reconsideration of a judgment following a final hearing Dismissal following withdrawal An employer s contract claim made by way of application as part of the response to the employee s contract claim Type A claims shall include claims related to unpaid wages, breach of contract and redundancy payments. Type B claims shall include unfair dismissal and discrimination claims. In certain circumstances a Claimant can make an application for a fee remission. Schedule 3 to the draft Order sets out the circumstances in which a remission might be applied. In addition, the Government has recently concluded a consultation in relation to fee remissions generally. The government's objective of the reform proposals is to create a single system of fee remissions (waivers) for all fee-paying courts and tribunals which is simple to use, more costeffective and better targeted to those who need it the most. The consultation closed on 16 May and we await the response (due to be issued in the "summer "). A copy of the draft Order can be found here: New Employment Tribunal Procedural Rules The new Regulations follow an extensive review of employment tribunal rules by Mr Justice Underhill (now Lord Justice Underhill), the former President of the EAT. The new Tribunal rules are due to come into effect on 29 July. We set out below some of the key points:

5 Page 5 The new Rules confirm that a Tribunal will reject a Claim Form if it is not accompanied by the relevant fee or a remission application. If the claim is rejected the form shall be returned to the Claimant with a notice of rejection explaining why it has been rejected. In relation to other fees payable in respect of a claim, if this is not paid by the due date, the Tribunal will write to the party giving a deadline for payment of the fee or the presentation of a remission application. If the party does neither the claim will be dismissed without any further order. There will be a discretion to reinstate a claim if the fee is paid (or remission application made) after the deadline has passed. There will be an initial paper sift by an Employment Judge of all Claim Forms and Response Forms, to assess whether there is an arguable claim and defence (with a right to present submissions in writing as to why the Claim/Response should not be dismissed). In addition, the Employment Judge may order a party to provide further information at this stage. Witness statements shall stand as that witness's evidence in chief unless the Tribunal orders otherwise. Copies of witness statements shall be available for inspection during the course of the hearing by members of the public attending the hearing (subject to some exceptions). There will be changes to terminology and practice, including 'case management discussions' and 'pre-hearing reviews' being combined into 'preliminary hearings'. There will be more case management powers for Employment Judges, including a power to conduct a hearing by electronic communications. There will be changes to costs rules, including the power for Employment Judges to carry out a detailed assessments of costs (rather than referring it to a County Court). A copy of the new rules can be found here: ACAS Code of Practice on Settlement Agreements As part of its reforms of current employment laws the Government intends to rename compromise agreements as settlement agreements and to extend the "without prejudice" regime to situations where no formal "dispute" has arisen between the parties. Section 14 of the ERRA will introduce a new s.111a into the Employment Rights Act The current common law principle that without prejudice discussions are privileged, and therefore inadmissible as evidence in Court or Tribunal proceedings, only applies in situations where there is an existing dispute and the discussions do not involve any "unambiguous impropriety". The current proposal means that employers will be able to have discussions with their employees regarding the termination of their employment and in certain circumstances these discussions shall be inadmissible in unfair dismissal proceedings. The statutory protection will, however, be lost if there is "improper behaviour" by either party. To assist the interpretation of the new law there shall be a new ACAS Code of Practice on Settlement Agreements and some non-statutory guidance. ACAS has now published its response to the consultation on the draft Code of Practice. There are a number of changes in the revised Code from the original draft including: The title has been amended to make clear that the focus of the Code is the confidentiality aspect of s.111a of the ERA Setting out the requirements for a settlement agreement to be legally valid, noting that simply stating that the agreement is in "full and final settlement of all claims" will not be sufficient to contract out of employment tribunal claims, the agreement needs to specify which claims it is intended to cover. Specifying that a minimum of ten calendar days should be allowed for a party to consider a written settlement offer to allow for independent advice to be taken. The Code no longer refers to the suggestion that the initial offer be made in writing. However, it confirms that if the initial proposal is oral it must ultimately be put in writing to become a legally binding agreement.

6 Page 6 Whilst not a legal requirement the Code notes that employees should be allowed to be accompanied at any meeting to discuss the proposal. The illustrative list of what constitutes improper behaviour has been expanded to include all forms of victimisation. A breach of the Code will not in itself lay a party open to litigation, but they will be able to refer to it to support their position in legal proceedings. Tribunals will take the Code into account when considering relevant cases but there will not be an adjustment to any compensation awarded by a Tribunal in circumstances where the Code was not followed. The Response to the consultation and revised Code of Practice can be found here:

7 Page 7 News from the Courts Seldon v Clarkson, Wright and Jakes ET /2007 We have followed the progress of the Seldon age discrimination litigation in various bulletins, most recently following the Supreme Court's decision in April 2012 (click here to read). As you may be aware, the case was re-submitted to the Employment Tribunal to consider a number of issues relating to justification and in particular whether 65 was an appropriate age for mandatory retirement, or whether another age should have been adopted. The Tribunal held that a mandatory retirement of 65 was a proportionate means of achieving the legitimate aims identified. Accordingly, Mr Seldon lost his case. It is important to note that this decision does not provide an unconditional authority for companies to justify a mandatory retirement age of 65. Justification always depends on fact-sensitive matters relating to the particular employer and the type of work the employee is required to do. In addition, this case was decided based on social policy and demographics in 2006, before the abolition of the default retirement age in As such, the Tribunal noted that the decision may have been different if the facts had arisen today. Onu v Akwiku UKEAT/0283/12/RN & UKEAT/0022/12/RN This case confirms that a claim can be brought for post-employment victimisation under the Equality Act The Claimant was a domestic servant who brought a claim against her employers for victimisation after she had left employment (in addition to other issues). The Employment Tribunal held that victimisation was not made out on the facts. The Claimant appealed. The Respondent raised the argument that post-employment victimisation claims were excluded under s. 108(7) of the Equality Act The EAT considered that the construction of the Equality Act 2010 does permit employees to bring claims for acts of victimisation that took place after their employment had ended. It considered that the conflicting judgment in Rowstock Ltd v Jessemey had been wrongly decided (interestingly one individual sat as a lay member on both cases!). The EAT also noted that the European Directive further strengthened its conclusions. To clarify the position now that there are inconsistent EAT decisions on this point, permission to appeal was granted. USDAW and others v WW Realisation 1 Ltd (in Liquidation) and another It was recently reported that the EAT has found in favour of the trade union representing former employees of Woolworths in claims for protective awards, overturning the employment tribunal's decision that each store was a separate establishment for the purposes of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). The collective consultation obligations in TULRCA apply where an employer is proposing to dismiss as redundant 20 or more employees at one establishment over a period of 90 days or less. For some time, it has been acknowledged that the words "at one establishment" are incompatible with the underlying EU Collective Redundancies Directive (Directive 98/59/EC). What amounts to an "establishment" for these purposes has been the subject of much case law. The claimants' lawyers in this case have confirmed that the EAT has ruled that the words "at one establishment" in section 188(1) of TULRCA are to be "disregarded" for the purposes of any collective redundancy involving 20 or more employees. This would mean that once it is proposed that at least 20 employees in a single business are to be made redundant, their place of work would be irrelevant for the purposes of triggering the consultation obligations. The decision represents a significant change in UK redundancy law. A written judgment on this case has not yet been issued. If you require further information on anything covered in this briefing please contact David Smellie (mailto:david.smellie@farrer.co.uk ) or your usual contact at the firm. This note is intended as a general summary of the law. It should not replace legal advice tailored to your specific circumstances. Farrer & Co LLP, June