Five Enterprise and Regulatory Reform Act changes that will affect your business

Year Published: 2013

Many provisions of the Enterprise and Regulatory Reform Act 2013 came into force on 25 June 2013. We have picked the top 5 that will affect your business:

1. From 25 June 2013, employees will be able to submit a claim of unfair dismissal to an employment tribunal related to their political opinions and affiliations. The usual requirement to have two years qualifying service before you can bring a claim of unfair dismissal will not apply to a claim brought in connection with political opinions/affiliations.

It will therefore be important to remind staff to keep their political views to themselves and not introduce them to the workplace.

2. Employees who ‘blow the whistle’ can sometimes be treated badly and even ‘sent to Coventry’ by their fellow employees.

As from 25 June 2013, the government has introduced personal liability for employers who victimise whistle blowers. Employers therefore can be personally ordered to pay compensation. This is exactly the regime which has always applied to discrimination claims.

3. When the ‘Whistle Blowing Legislation’ was introduced, it was done so with the heading of ‘Public Interest Disclosure’. It is generally recognised as a very good idea that employees should be entitled to ‘blow the whistle’ where it is in the ‘public interest’. The development of case law relating to whistle blowing however has led to a conclusion that the current definition of public interest includes someone blowing the whistle about the terms of their own contract of employment! In some circumstances, that might have been said to have a public interest element but in the vast majority of cases, it will not.

The government has therefore introduced a requirement that in order to benefit from whistle blowing, that the complaint (disclosure) has to have that essential element of public interest. That requirement will apply to any and all disclosures which are made on or after 25 June 2013.

Most people will support the introduction of this public interest requirement.

However, the other side of these changes is that where someone blows the whistle in bad faith, that will not now prevent the tribunal accepting that it is a valid set of circumstances on which an employee is able to bring a claim in the employment tribunal if they suffer a detriment or are dismissed because they have made that disclosure. Instead of giving the power to an employment tribunal to dismiss a claim which is lodged in good faith, the government has instead replaced that with a power to enable an employment tribunal to reduce the value of compensation by up to 25%. However, that penalty will only bite where the claim is successful.

4. An employee who pursues an unlawful deduction of wages claim will have to pay a fee of £160 when issuing a claim form and £250 as a hearing fee approximately 4-6 weeks before the tribunal hearing.

An employee who pursues an unfair dismissal or discrimination claim will have to pay an issue fee of £230 and a hearing fee set at £950.

The government is planning to introduce a fee-remission system which will allow some claimants either to escape payment of the fee altogether or alternatively have to pay only a portion of the fee.

The documentation and the details for that system are still under review and whether they will effectively be in place by 29 July 2013 is at least the subject of some considerable doubt!

5. The current limit on the value of a compensatory award for unfair dismissal is just over £75,000. Those cases are very rare. The statistics published by the employment tribunals year on year show that the average award made in an unfair dismissal case is less than £10,000.

The government however proposes to introduce (Summer 2013) a cap on the maximum amount of a compensatory award. The maximum amount will either be the current statutory cap of just over £75,000 or alternatively, where the figure is lower, a maximum of one year’s earnings. That, as far as we are aware, will relate to 52 weeks gross pay and not 52 weeks net pay. The number of occasions when this would be applicable seems likely to be very limited however.

For further information on this or any other employment matter, please contact our employment team.

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