To boost economic recovery, government initiatives aimed at changing areas of employment legislation and reform of the Employment Tribunal system were announced in 2011.
The government also launched the ‘Red Tape Challenge’ which gave the public the opportunity to identify those rules and regulations which work well and those that are an unnecessary burden.
Set out below is an overview of the key dates and developments for 2012.
31 January – Deadline for proposed changes to collective redundancy consultation requirements and TUPE Regulations.
1 February – Increase in statutory rights and limits payable:
· The limit on the amount of a week’s pay for the purposes of calculating statutory redundancy payments and the basic award for unfair dismissal increases from £400 to £430 where the effective date of termination falls on or after 1 February;
· The maximum basic award for unfair dismissal increases from £12,000 to £12,900;
· The maximum compensatory award for unfair dismissal increases from £68,400 to £72,300;
· The guarantee pay limit for a day’s pay during short-time or temporary lay off increases from £22.20 a day to £23.50 a day (subject to a maximum of 5 days or £117.50 in any 3 months).
6 March – Deadline for consultation in the Reform of the Employment Tribunal system. Two options are proposed:
· Under Option 1 there are two main charging points for fees – when the claim is issued and before the hearing. The issue fee will depend on the level/nature of the claim and whether it is a single claim or a multiple claim and the fee will be between £150 – £250. The hearing fee will be between £250 – £1,250.
· Under Option 2 there will be one main charging point, the time of issue. The fee will depend on the level/nature of the claim and what the claimant states their claim to be worth. The fee will be between £200 – £1,750 but note that the highest fee is payable if the claimant is seeking an award over £30,000.
With both options, further fees will be payable for certain specified applications. If Option 1 is adopted it would be introduced in 2013 and Option 2 in 2014.
9 April – Annual increase in statutory payments:
· Statutory sick pay increases from £81.60 to £85.85 a week;
· The statutory maternity, paternity and adoption pay prescribed rate increases from £128.73 a week (or 90% of normal weekly earnings if lower) to £135.45 (or 90% of normal weekly earnings if lower).
The government’s response to the consultation paper ‘Resolving Workplace Disputes’ (further details can be provided) issued in January 2011 has been described as the most radical reform to the employment law system for decades. The following changes have been confirmed for April 2012 but with no actual date as yet.
The qualifying period for unfair dismissal will be extended from 12 months continuous employment to 2 years. The policy decision behind this proposal is to reduce the burden of employment legislation for employers and to make it easier to recruit.
There are a number of ‘day 1’ rights for which no qualifying period is necessary e.g. discrimination claims and whistleblowing.
Employment Tribunal reform
The government’s view is that simplifying the Employment Tribunal system will result in fewer claims. The government intends to change the rules as follows:
· Deposit orders will be increased from £500 to £1,000;
· Cost awards will be increased from £10,000 to £20,000;
· Witness statements being taken as read unless the Employment Judge directs otherwise;
· Employment Tribunals having the power to direct the parties to bear the cost of witnesses’ attendance;
· Employment Judges sitting alone in unfair dismissal cases.
There are other significant changes proposed to encourage the resolution of workplace disputes but no date has yet been announced. However, we can expect the following:
It is proposed that potential claimants will be required to submit key details of their dispute to ACAS within the relevant time limit (usually 3 or 6 months). ACAS will then provide the opportunity to engage in early conciliation in an attempt to avoid Employment Tribunal proceedings.
Financial penalties for employers
Employment Judges will have the discretion to levy a financial penalty on employers who lose at the Employment Tribunal for breaching employment rights and the penalty will be payable to the Exchequer. The amount will be based on half of the total amount of the award made by the Employment Tribunal with a minimum threshold of £100 and a ceiling of £5,000. As an incentive for any penalty to be paid quickly, it will be reduced by 50% if paid within 21 days.
The government considers that mediation is an important form of early dispute resolution and intends to embark on ‘long-term reform’.
This will pilot in the employment intensive retail sector and in the creation of regional mediation networks through the provision of mediation training to representatives from SMEs.
The employment law review period of the Red Tape Challenge ended in October 2011 and the four categories considered were Compliance and enforcement, Letting people go, Managing staff and Taking people on. The review covered legislation such as the rules on collective redundancies, national minimum wage and statutory sick pay and the government response is expected in spring 2012.
From 1 October 2012, phased in over a four year period, all employers must automatically enrol eligible jobholders in a pension scheme (larger employers being affected before smaller employers and new businesses) using either their own qualifying pension scheme or the National Employment Savings Trust (NEST).
In November 2011, the government announced it would publish a consultation paper on the use of compromise agreements and the government will consider how to develop a standard text for these as well as guidance for their use. It will also consider whether the law should be amended to enable existing and future claims to be compromised.
The potential introduction of a system of ‘protected conversations’ is causing a lot of media interest. This would allow either party to raise any employment issue at any time (without the existence of a formal dispute) which cannot then be referred to in any subsequent Employment Tribunal proceedings. This will be subject to a consultation exercise.
Rapid Resolution scheme:
A consultation is expected on developing a scheme for low value, straightforward claims e.g holiday pay which may be assessed without the need for a hearing by legally qualified individuals.
Employment relations reform:
Also in November 2011, the government announced proposals to reform employment relations and will seek views about introducing compensated no-fault dismissals for companies with 10 or fewer employees. It will also consider making changes to its Code of Practice on disciplinary and grievance procedures or introducing supplementary guidance for small businesses.
An independent Sickness Absence review to consider how the current system could be changed to help people stay in work and to reduce costs ended in November 2011. It included proposals to set up an Independent Assessment Service to establish how an employee can be supported in a return to work after 4 weeks absence and whether the ban on pre-employment health questionnaires should be re-considered. It also proposed that fit notes should be revised to assess the employee’s capacity to return to work generally and not just to their own job. The government is expected to respond to the review in 2012.
The government is yet to respond to the consultation exercise Consultation on Modern Workplaces which ended in August 2011. The delayed government response is now expected early 2012. There are four key areas considered, flexible parental leave, flexible working, the Working Time Regulations and equal pay. The proposals may require extensive changes to policies and procedures and the government response is awaited with interest.
Clearly there are significant changes in the year ahead with many challenges to be faced by employers and HR personnel.