These pages do not apply outside Great Britain.
This page outlines proposed changes relating to the employment rules. One change which has just taken effect is fees for employment tribunal claims. The proposed changes do not necessarily apply to Northern Ireland.
There are two main groups of changes coming in. The less important changes are those to the Equality Act itself: see below Red Tape Challenge: employment repeals. Three Equality Act provisions are being repealed:
More fundamental are changes in how workplace disputes are resolved. These apply to other employment claims as well as Equality Act claims. Some of the most important changes:
There is an implementation timetable on my main Proposed changes page.
I also mention below some important changes to unfair dismissal (below). These do not affect Equality Act claims. However, people may be tempted to bring more Equality Act claims to get round the unfair dismissal restrictions. The unfair dismissal changes are: reduction in compensation limits, easier settlement agreements, and 'rights for shares'.
Many of the changes are in the Enterprise and Regulatory Reform Act 2013 (link to legislation.gov.uk).
Not a change to the law, but potentially important, is the National Equality Standard launched in May 2013.
The Government announced in October 2012 (following consultations) that three Equality Act provisions are being repealed:
The first two changes (on third party harassment and the questions procedure) are being made by the Enterprise and Regulatory Reform Act above. The third change, on recommendations, is being made in the Deregulation Bill Link to gov.uk) - see Proposal to abolish wider power to make recommendations.
The consultations on the three repeals, including the Government responses issued in October 2012, are at:
The changes are part of the Red Tape Challenge: see Proposed Changes: Red Tape Challenge.
From 29th July 2013, fees are payable in respect of claims to employment tribunals. See Fees for Employment Tribunal claims.
From April 2014, Employment Tribunal claimants will normally have to submit their complaint to ACAS first. This gives an opportunity to resolve the dispute through conciliation before going to a tribunal.
The rules don't mean the claimant or employer has to engage with ACAS. If either party is unwilling to conciliate, or if conciliation is unsuccessful, the claim can go to a tribual. The normal time limit for submitting a claim is extended to allow for the conciliation period.
The reform in ss.7-9 ERRA 2013, with ERRA Sch 2 on extension of time limits. The government issued a response to a consultation on detailed implementation on 12th July 2013: www.gov.uk/government/consultations/early-conciliation-consultation-on-proposals-for-implementation. The consultation document stresses that the new rules are not intended to be a barrier to justice. For example, when notifying ACAS there will not be a requirement for the claimant to describe his or her claim. Such a requirement would enable the employer to make technical legal arguments that the claims being put to the tribunal were not adequately described to ACAS (but there may still be problems: see workingtheory.co.uk/2013/early-conciliation.html). Also the claimant (or employer) will be free to say to ACAS that they do not want conciliation, and the employer will only be contacted by ACAS if the claimant agrees. It is also proposed that the claimant will not need to contact ACAS if the employer has done so.
The Enterprise and Regulatory Reform Act includes a power for employment tribunals to levy a financial penalty on an employer found to have breached employment rights, but only if the tribunal "is of the opinion that the breach has one or more aggravating features." The new provision is expected to take effect in April 2014.
The penalty is payable to the government, and is 50% of the compensation awarded to the claimant (subject to a minumum of £100 and maximum of £5,000). The penalty is reduced by half if the employer pays within 21 days. So if the employer pays promptly, it effectively has to pay an extra 25% to the government, over and above the compensation it pays to the claimant.
What will be 'aggravating features', so as to give the tribunal power to order a penalty? This is a key question. The Explanatory Notes to the Bill say that this is not prescribed and will be for the employment tribunal to decide.
75. ... A non-exhaustive list of factors which an employment tribunal may consider in deciding whether to impose a financial penalty under this section could include the size of the employer; the duration of the breach of the employment right; or the behaviour of the employer and of the employee. The concept of aggravating features in section 12A is not the same as the existing regime of aggravated damages in discrimination claims in England and Wales.
76. An employment tribunal may be more likely to find that the employer's behaviour in breaching the law had aggravating features where the action was deliberate or committed with malice, the employer was an organisation with a dedicated human resources team, or where the employer had repeatedly breached the employment right concerned. The employment tribunal may be less likely to find that the employer's behaviour in breaching the law had aggravating features where an employer has been in operation for only a short period of time, is a micro business, has only a limited human resources function, or the breach was a genuine mistake.
Explanatory Notes (pdf, link to parliament.uk) to the Enterprise and Regulatory Reform Bill.
A side effect of the financial penalty provisions - presumably unintended - is that there may be pressure on employers to settle claims out of court at more than they would otherwise have paid, for fear of a further penalty if they lose at tribunal.
The Enterprise and Regulatory Reform Act includes provisions to facilitate a 'Rapid Resolution Scheme', under which claims could be decided by a legal officer without a tribunal hearing. Regulations would set out what type of claims can be determined without a hearing, but also the parties would have to agree to this method of settling the dispute.
In its response to the 'Resolving workplace disputes' consultation, linked below, the Government said it was looking at a scheme to provide quicker, cheaper, determinations in low value, straightforward claims (such as holiday pay). The scheme could involve non-judicial determination based only on papers (ie no oral hearing). "Potential advantages may include claims being dealt with more quickly than the current system permits and, because of the potential for parties and witnesses avoiding having to attend a hearing, at less cost." Proposals would be subject to a full consultation in due course.
In a survey of employment lawyers, the rapid resolution scheme was the most popular of the reforms, supported by 78%: Most lawyers believe employment law reforms 'unworkable' (link to workplacelaw.net), 20/12/11.
'Compromise contracts' have been renamed 'settlement agreements', from 29th July 2013. See Resolving disputes: Reaching a settlement.
The legislation was amended by the Enterprise and Regulatory Reform Act. The Government believes this will help to avoid any party refusing to sign an agreement on the grounds that they do not want to be seen as 'compromising'. The Commencement Order is SI 2013/1648.
See also below Dismissal procedures: settlement agreements.
Revised employment tribunal rules took effect on 29th July 2013: The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 (link to legislation.gov.uk). This coincides with the introduction of fees for tribunals
These rules are the outcome of a "root-and-branch review" which the Government asked Mr Justice Underhill to undertake, "in order to modernise them and ensure we have a system that meets the needs of an economy which is striving to recover and grow." (Mr Justice Underhill retired as President of the Employment Appeal Tribunal at the end of 2011.) The Government's response to a consultation on the review's recommendations was published in March 2013: see Employment Tribunal Rules: review by Mr Justice Underhill (link to bis.gov.uk).
The Government is to embark on "a long term reform programme to build a new approach to resolving workplace disputes so that the use of mediation to resolve disputes becomes a more accepted, and trusted, part of the process." There will be a major pilot in the retail sector; and also a regional pilot of an area-wide approach to develop mediation networks that run across sectors within a particular geographical area.
A pilot scheme for two SME mediation networks in Cambridge and Manchester was subsequently announced. Links:
These points are not on the Equality Act, but on unfair dismissal (a separate type of claim) and other employment rights.
An employer and employee are now able to agree that the employee gets shares in the employer (or its parent) but gives up some employment rights. The rules took effect on 1st September 2013 (SI 2013/1766).
The employee will have to get at least £2,000 worth of shares, but will no longer be able to claim unfair dismissal (except in certain cases) or statutory redundancy pay. He will also give up some other rights. Discrimination rights under the Equality Act are not affected.
The House of Lords rejected the rules twice, but finally accepted them on 24th April 2013 after concessions by the Govermnent (see links below). One concession is that the employee will need to have independent legal advice, paid for by the employer.
The employee-shareholder rules are in s.31 Growth and Infrastructure Act 2013 (link to legislation.gov.uk. The government issued a response to a consultation on the proposals in December 2012: Consultation on implementing employee owner status (link to bis.gov.uk).
Receipt of the minimum £2,000 worth of shares is to be free of income tax and national insurance contributions. Also gains on shares worth up to £50,000 will be free of capital gains tax. See More details published of tax treatment of 'employee shareholder' shares (link to outlaw.com), 20/3/13.
The compensatory award for unfair dismissal has been reduced to 52 weeks' pay or (if lower) £74,200. This does not affect the fact that there is no fixed upper limit for discrimination awards.
The new limit applies to all dismissals from 29th July 2013 (strictly where the 'effective date of termination' is on or after that date). The regulations reducing the limit are the Unfair Dismissal (Variation of the Limit of Compensatory Award) Order 2013 (link to legislation.gov.uk).
Compromise Agreements Ltd has started a judicial review claim arguing that it is unlawful to limit compensation to one year's pay: see www.settlementagreements.org/jr. Due to lack of resources the claim has been based only on age discrimination, arguing that older people will find it harder to be re-employed within a year and so will be disproportionately affected by the cap on compensation. But a similar argument could be made for disabled people.
Compromise Agreements Ltd say "We would be glad to hear from any groups or individuals willing or able to get stuck in and lend a helping hand."
This new provision makes it easier for bosses to ask staff to leave with a cash payment. However, the employee will still be free to reject the offer. The key point of difference from the previous position is that the employee will not normally be able to use the settlement offer in a future unfair dismissal claim. If the employee rejects the offer, the employer still needs to follow a fair process before finally deciding to dismiss the employee.
There is an ACAS Code of Practice, supplemented by further guidance: www.acas.org.uk/settlementagreements
The new rule does not apply to Equality Act claims. So a settlement offer could still be taken into account in a discrimination claim.
On 17th January 2013 the Government issued its response to a consultation on the proposals: Ending the employment relationship (link to bis.gov.uk).
The Equality and Human Rights Commision has working with businesses to develop an equalities standard. This launched in May 2013: National Equality Standard.
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Last updated 20th October, 2013