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The Enterprise and Regulatory Reform Bill will bring more changes for UK Employment Law

Enterprise and Regulatory Reform - Employment Law
The Enterprise and Regulatory Reform Bill was introduced to parliament on 23rd May and when passed will change UK employment law in several significant ways. The Bill intends to change the way workplace disputes are resolved, the involvement of Acas, the operation of Employment Tribunals and the status of whistleblowing claims.

The Government has introduced the Bill as part of the 'Red Tape Challenge' which seeks to cut the burden of regulation and costs for employers. It follows the recent extension of the qualifying period to claim unfair dismissal and the introduction of substantial fees to lay a claim before an Employment Tribunal.

The Bill will significantly enhance the role of Acas in resolving workplace disputes. In order to make a claim at a tribunal, it will first be necessary to use the services of Acas to try and reach a settlement out of court. To allow for this, the current time limits that apply for making a claim will be extended.

This is a move that has been generally welcomed by bodies representing employers and employees. However some organisations, such as the Citizens Advice Bureau, have warned that there will need to be a significant investment in the resources given to Acas in order to carry out their duties effectively.

Compromise agreements are to be replaced by settlement agreements. This will allow the employer to make an offer of a 'termination package' to an employee, without the fear that the offer could then prejudice a case brought to a Tribunal.

Some decisions that are currently taken at a full Tribunal will be taken instead by an appointed Legal Officer where all parties have agreed in writing beforehand. This will only apply to fact-based decisions, such as disputes over pay or other entitlements. It is hoped that this measure will free up a considerable amount of time for full Employment Tribunals to deal with more serious cases.

There will also be changes to the Employment Appeals Tribunal system. In future appeal cases will be heard by a single judge sitting alone, except in some complex cases where a judge may decide to invite up to four non-legal panel members.

A controversial measure will allow the Secretary of State to reduce the maximum amount of compensation for unfair dismissal claims, currently set at £72,300. It is intended that the maximum amount succesful claimants will receive in future will be the lower of two options.

  1. One years salary, or
  2. the national median wage - currently £28,000.

Tribunals are to be given the power to impose a financial penalty for 'aggravated features' of an employer's conduct during the dispute process. These features have not yet been defined but the aim is to tackle rogue employers, such as serial offenders or those who do not give appropriate cooperation to the Tribunal. The maximum fine that can be imposed will be £5,000, which will be reduced by fifty per-cent if paid promptly. The money will be given to the Ministry of Justice and not to the claimant.

Following some recent court decisions on whistleblowing, the Bill will narrow the definition of a public interest disclosure. The Bill introduces a public interest test that must be applied to a claim in order to be successful. The Government believes that this will close a legal loophole that has seen a sharp rise in the number of whistleblowing cases, particularly in the financial services sector. However the move has many critics who believe that it will discourage genuine employees from exposing illegal or dangerous practices.

The Business Secretary, Vince Cable, confirmed during the Bill's second reading on 11th June that Adrian Beecroft's controversial proposals for 'no fault dismissals' would not be taken forward. He also announced that there would be no automatic vote for shareholders to approve or block directors pay.


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