The Enterprise and Regulatory Reform Act 2013

In an attempt to cut the burden of red tape on business, the government  has enacted the Enterprise and Regulatory Reform Act 2013.  The Act brings about a whole host of legislative changes across a broad spectrum of areas; nestled in amongst measures to introduce a Green Investment Bank and the creation of a new Competition and Markets Authority are a number of changes to employment law.  The key employment law changes to be found within the Enterprise and Regulatory Reform Act are set out below.

Mandatory Conciliation Procedure

Section 7 of the Enterprise and Regulatory Reform Act inserts two new sections into the Employment Tribunal Act 1996.

  1. Section 18A creates the requirement that a claimant must contact Acas prior to instituting proceedings.
  2. Section 18B imposes a duty on the parties to go through a conciliation process via Acas prior to proceedings.

In line with these changes, claimants considering bringing disputes to employment tribunals will be subjected to a compulsory four step Acas conciliation process from April 6th 2014.

Step 1:  A claimant must send ”prescribed information” in the ”prescribed form” to Acas prior to issuing a case to an employment tribunal.  It is anticipated that the prescribed information mentioned in the Enterprise and Regulatory Reform Act will be limited to the contact details of the parties.

Step 2:  Acas will then forward this documentation to a conciliation officer.

Step 3:  The conciliation officer will then attempt to broker a settlement between the parties within a prescribed period (most likely a month)

Step 4: In the event that a settlement is not reached, either because no settlement appears possible to the conciliation officer or because the prescribed period expires, then the conciliation officer will issue a certificate to confirm that no settlement has been reached.  In order to issue  a claim to an employment tribunal a claimant will need to submit the certificate with their claim.

What effect will compulsory conciliation have on time limits?

Most types of employment claim must be brought within 3 months.  In recognition of the additional time burden that compulsory conciliation will impose the new rule will provide that where conciliation begins with less than one month to run of a 3 month deadline then the issue of a certificate by a conciliation officer will allow a claimant to issue within a month.  The example serves as an illustration of how this might operate.

Confidentiality of Negotiations before Termination of Employment

The Enterprise and Regulatory Reform Act has inserted a clause into the Employment Rights Act making details of pre-termination negotiations held between employers and employees inadmissible in unfair dismissal employment tribunals.  Effective from 29th July 2013, this means that where employees bring claims for unfair dismissal to employment tribunals they are not able to use the evidence of any discussions that were held between them and their employer prior to their termination.  For example, if an employer offers an employee £2,000 to ”go quietly” then such an offer could not be referred to in any subsequent tribunal hearing.

The intention of the government in creating this new regulation is to encourage employees and employers to settle their disputes at the earliest opportunity.  By protecting the conversation which are had between the parties in the early stages of negotiation then the hope is that disputes can be resolved more readily.

When Does it not Apply?

Conversations between employers and employees are not protected except in the case of claims for unfair dismissal.  Even claims for automatic unfair dismissal are not covered by this new piece of legislation.  Equally, the legislation does not apply if  there is evidence of improper behaviour on the part of the Respondent (former employer).

Changes to Hearings at Tribunals

Currently tribunals are heard by a judge sitting alongside two lay members, one from the employer panel and one from the employee panel.   In future, claims will be heard by a judge sitting alone unless otherwise directed by a judge.  The judge may deem it necessary to be accompanied by up to four lay members – two from an employers perspective and two from an employees perspective.

In addition to the changes to tribunal panels the Enterprise and Regulatory Reform Act also creates the possibility of the tribunals being heard by Legal Officers (not necessarily judges) providing that all the parties to a dispute consent in writing to such an arrangement.

Changing the Name of Compromise Agreements

The Enterprise and Regulatory Reform Act brings about a name change for Compromise agreements which will henceforth be known as Settlement Agreements.

Limits to the amount which may be awarded in Unfair Dismissal Claims

Compensation in Unfair Dismissal cases will be three times median annual earnings or 52 weeks pay of the claimant concerned whichever is the lower amount.

Equal Pay

Where employers are found by tribunals to be in breach of Equal Pay legislation then they will be required to order the employer to conduct an equal pay audit.

Caste Discrimination

Caste Discrimination was widely anticipated to be added to the provisions for race discrimination in the Equality Act under the auspices of the Enterprise and Regulatory Reform Act.  it was however not included although the Act granted the power for this to be considered but not before the 25th April 2018.

Protection for Political Beliefs

In normal circumstances, an employee must have been employed by his/her employer continuously for two years in order to bring a claim for unfair dismissal.   The Enterprise and Regulatory Reform Act has removed this time limit in the case of unfair dismissal on the basis of political beliefs bringing it into line with discrimination claims.

Financial Penalties

The Enterprise and Regulatory Reform Act created the possibility that a new section 12A be inserted into the Employment Tribunal Act giving employment tribunals the power to order the payment of a financial penalty where a breach of workers rights has occurred and there are aggravating factors.  The financial penalty will be limited to  no more than £5,000

Protected Disclosures

Protected Disclosure is the correct term for what is more widely known as whistle blowing.   The Enterprise and Regulatory Reform Act creates the requirement that employees are only protected from unfavourable treatment if they have blown the whistle in the public interest.  For example, highlighting a health and safety issue or tax fraud would be in the public interest but other less serious disclosures may not qualify for protection.

In addition, compensation may be reduced by 25% in cases where a protected disclosure is not made in good faith and an employment tribunal considers it just and equitable to make a reduction.

Third Party Harassment

The Enterprise and Regulatory Reform Act has removed the liability of employers to protect their employees from third party harassment.  For example, being subjected to lewd comments from clients or customers.  An initial glance at the repeal of such a piece of legislation might cause a casual observer to fear a return to the dark ages. Employees are however still protected by standard harassment protection and employers may still be liable if they fail to protect employees from being harassed because the environment in which they work is ”hostile, humiliating or offensive”.  Changes to third party harassment are dealt with more fully elsewhere on this website.

Discrimination Questionnaires

On the 6th April 2014 the question and answer system under section 138 of the Equality Act will be repealed.   Currently, where a person believes that they have been subjected to unlawful discrimination, they are entitled to obtain information about that discrimination by submitting a questionnaire to the other party. If a party fails to answer the questions within this document then a tribunal can draw an inference (perhaps negative)  from the failure to answer.

 Cutting Red Tape: the Future

The government’s bid to drive out red-tape is by no means at an end, indeed in the 2013 Queen’s Speech mention was made of a Deregulation Bill with the aim of reducing the burden of excessive regulation on businesses.   It has been suggested that Employment tribunals will be given powers to make wider recommendations where discrimination has occurred.