Changes to Employment Law in the Enterprise and Regulatory Reform Bill

Although hardly a catchy title, the Enterprise and Regulatory Reform Bill contains a number of significant changes to employment law which, if it passes through Parliament in its current form, will have a major impact on how employment law disputes will be addressed.

The Bill has received its first reading in the House of Commons.

The Bill includes a number of important proposals:-

A mandatory period of ACAS conciliation before an individual is able to commence a claim in the Employment Tribunal. The proposal here is that individuals would be compelled to submit details of their claim to ACAS, who would then try to resolve the dispute in a set time. In the event that a settlement is not competed within the set period the ACAS officer will issue a certificate to the individual must he/she must have before being able to start a claim in the Tribunal. The proposals allow for Tribunal time limits to be extended to allow the period they are being addressed by ACAS. This does seem very like the ideas that underpinned the obligatory grievance and disciplinary procedures that existed between 2004 and 2009. Those procedures resulted in extensive litigation over the interpretation and implementation requirements. This scheme must surely be dependent on the required funding and support being given to ACAS. Our experience is that ACAS is already stretched at the moment without additional work being sent their way through an obligatory process like this one.    

A rapid resolution scheme for certain types of case to be heard by a "legal officer" without the need for a hearing. This will apply where the parties consent to it- a major restriction when tension is high in so many employment disputes. Secondary legislation will be produced to list the types of cases that would be subject to this process. We would assume this would be likely to include claims such as arrears of wages rather than areas that involve complex legal issues. 

Powers to limit the maximum compensatory award for unfair dismissal. It is suggested that this could be fixing a maximum award at somewhere between 1 and 3 times average pay, or limited to 1 year's pay. This aspect is still subject to a range of considered approaches.While this may have a practical impact the fact remains that average awards actually made for unfair dismissal in the Employment Tribunals are remarkably low, and did not even change significantly when the previous Government raised the maximum compensatory award for unfair dismissal from £12,000 to £50,000 in one step.

Fines to be paid by employers in breach of employment law. The proposal is that Employment Tribunals will have the discretionary power to impose a fine on an employer when the Tribunal has found that the employer's behaviour contained an "aggravating feature". Frustratingly, no definition has been given for "aggravating feature.".Where compensation is awarded to the claimant the penalty would be set at 50% of the compensation, subject to a minimum of £100 and a maximum of £5,000 (but reduced if the employer pays promptly). This is an aspect of the Government's proposed changes to employment law that has received almost no media attention! 

The Bill may well be amended in its course through Parliament, so this is not likely to be the final version.

It is clear that the Government is looking at reducing the number of claims in the Employment Tribunal, and this underlies the proposals for the enhanced role of ACAS and the introduction of a fast-track approach using "legal officers". The previous statutory grievance and disciplinary procedures failed to reduce the number of claims on a consistent basis while they lasted. It remains to be seen if the current proposals will achieve this.

If you need any help or assistance on the issues raised in the article do not hesitate to contact Hallett Employment Law Services Ltd.