September 17th, 2013

Employment Law Update: October 2013

A guest blog by Simon Jones  – HR Expert at Ariadne Associates

simon@ariadne-associates.co.uk – tel: 0151 222 0315

 

For the last few years Employment law changes come into force in April and October each year. The Enterprise and Regulatory Reform Act 2013 has changed this and in future changes will happen depending on when the relevant department announces them. However, to avoid sending you a bulletin every time there is a change, we’ll continue to issue an update twice a year unless there is something very urgent that employers need to be aware of immediately.

The first three items were covered in our special update in June but are repeated as a “reminder”

Changes to “whistleblowing” rules

These changes came into force in June 2013:

• A “whistleblower” will have to demonstrate that their disclosure was “in the public interest”.
• However, the requirement to make a disclosure in “good faith” to be protected is abolished; but any compensation awarded for a successful claim can be reduced if the disclosure was not “in good faith”.
• Employers may be held liable if their staff victimise a “whistleblower” (again, bringing this into line with discrimination etc)

Changes to Employment Tribunal Rules

• Since the end of July 2013 an individual has to pay a fee to enter a claim to an Employment Tribunal. The system is intended to work in a similar way to the Small Claims Court in that there is an initial fee to make a claim and then a further fee if the matter needs to go to a full hearing. However, also consistent with other court hearings, the fee may be waived in full or part if the individual is able to satisfy certain criteria (primarily being on certain benefits or otherwise having particularly low income)
• Since June 2013 an employee who believes that they have been dismissed because of political opinions or affiliations will not require any service to make a claim (putting this area on a par with discrimination, health and safety, union activities etc)
• The maximum amount of compensatory award for a successful unfair dismissal claim has been changed to the lower of 12 months’ pay or £74200

Settlement Agreements

Compromise Agreements were renamed “Settlement Agreements” at the end of July 2013
• Discussions about a settlement agreement or its terms will be “off the record” in ordinary unfair dismissal claims, but they may be used in discrimination/whistleblowing etc. cases or if there is an allegation of “improper behaviour” by either party. In effect, it broadens what used to be known a “without prejudice discussions” but not quite as much as was originally proposed
• There is now an ACAS Code of Practice on Settlement Agreements which will lay down timescales for people to consider their position, and also include standard templates that can be used.

“Employee-Shareholders”

1 September 2013 saw the introduction of a new category of worker called an “Employee Shareholder”. In a nutshell, an employee can agree to give up certain employment rights:
• Unfair dismissal (except the “automatically unfair” areas such as discrimination)
• Right to a redundancy payment
• Right to request flexible working
• And in addition will have to give 16 weeks’ notice of an early return from maternity/adoption leave etc. rather than 8 weeks.

In return, you as an employer must give the person shares worth at least £2000 in your business, which can be sold free of capital gains tax (up to a limit of £50000).

Existing employees cannot be “forced” to change their status; but you can offer new roles on the basis that they are on “Employee Shareholder” contracts not standard employment contracts.

However, before signing up to this new status, an individual must take legal advice and there must be a document from the legal adviser confirming they understand what they are entering into (similar to a settlement agreement). You as the employer must pay the adviser for this advice, and the individual must have at least 7 days to consider whether to accept it. You must also produce their draft contract “up front” so that they can take the advice.

Practical Steps you may need to take
a) If you’re thinking about introducing Employee Shareholder status, ask yourself why you are doing it – what benefits will it give your business? Is the time, cost and administration worth it? Are there any other downsides?
b) Make sure you understand all the HMRC rules – you’ll need to speak to your accountant as well as getting all the Employment aspects right
c) As this is a brand new area (with apparently very little interest from the overwhelming majority of employers), it is imperative that you get proper advice. This is a major change, not simply an amendment to existing rules.

Minimum Wage Changes
From 1 October 2013, National Minimum Wage rates will be:
• Increased from £6.19 to £6.31 an hour for workers aged 21 and over
• Increased from £4.98 to £5.03 an hour for workers aged 18 to 20
• Increased from £3.68 to £3.72 an hour for workers aged 16 to 17
• Increased from £2.65 to £2.68 an hour for apprentices under 19, (or over 19 but in first year of apprenticeship)
Practical Steps you may need to take
a) Check your payroll staff (or external payroll provider) are up to date on the changes
b) If your business uses “interns” you may well have to pay them the NMW – check with me on where this does and doesn’t apply

The End of “3rd Party Harassment”

From 1 October 2013, the Equality Act is amended to repeal “3rd Party Harassment”. This was the concept that you, as an Employer, could be held liable for discriminatory acts carried out by another person (such as a customer or supplier) if you were aware of the situation and failed to do anything about it.

Practical Steps you may need to take
a) You still have a health and safety duty towards your employees if they are being harassed or threatened by people who they deal with in the course of their work for you. So never ignore any complaint from a staff member. What this change means is that they can’t make a separate discrimination claim against you.
b) If an employee is harassed by colleagues on the grounds of their race, sex, disability etc you can still be held liable (see whistleblowing above).

TUPE

Changes to the notorious complicated TUPE rules are due to take effect in January 2014. As an employer you’ll be pleased to know that the changes are generally sensible and help to clarify some aspects. As a very quick summary the changes are:
• You’ll be able to renegotiate terms agreed from collective agreements one year after transfer, provided any changes are no less favourable to employees
• The location of a workforce can be within the scope of an “economic, technical or organisational reason” entailing changes in the workforce, thus preventing genuine place of work redundancies from being automatically unfair
• They clarify that for there to be a TUPE service provision change, the service must be “fundamentally or essentially the same” as before the transfer
• Allowing microbusinesses to inform and consult directly with employees (rather than have them elect representatives).
• Allowing TUPE consultation to also satisfy collective redundancy consultation rules in some circumstances.
• Moving the date at which the outgoing company must provide the incoming company with all the information on employees from 14 days before the transfer to 28 days.

Practical Steps you may need to take
a) If you are tendering for new work that starts after January, or have an existing contract that is up for renewal, make sure you’re aware of these changes

Recent Legal cases

It’s not just legislation changes that affect employers. Cases that are decided by the Employment Appeal Tribunal (EAT) or higher courts can set down precedents and guidelines which employers are expected to follow. Some recent cases which may have an impact on your business include:

Gross Misconduct – does it always justify dismissal?

While the expected answer here would be yes, the EAT ruled recently that there may be circumstances when dismissal is not the appropriate response. Even if behaviour is considered as gross misconduct, the employer should consider if there were any mitigating factors before deciding to dismiss. However, it was very clear that this would be an exceptional situation. The case is Brito-Babapulle v Ealing Hospital

Redundancy – when do you have to consult?

As you know (I hope) you have to consult for 30 days before issuing notice of redundancy (for 20-99 redundancies) and for 45 days (previously 90) if you’re planning 100 or more redundancies. Until recently, the view was that related to a particular workplace – so if you were planning 25 redundancies at 5 different sites this requirement to consult did not apply. However, following the long running case of USDAW v Woolworths the Courts have clarified that it applies across an employer as a whole. While small businesses are less likely to be affected, it’s important to remember if you do run “multi-site” operations.

Who can accompany an employee?
The law is very simple – an employee can be accompanied by a fellow employee or a trade union official. An employer cannot refuse a reasonable request from an employee to have a particular employee or union official, just because it might be disruptive (e.g. requesting an employee from a different site). The case is Toal v GB Oils Ltd

Covert Surveillance

I’ve covered in previous bulletins that an employee can covertly record conversations and submit them as evidence (although the judge making the ruling called the practice “distasteful” he said there was nothing illegal about it). In the interests of balance, employers can do the same – in a recent case City of Swansea v Gayle, the Tribunal ruled that the Council could covertly film a “sick” employee allegedly working, and use it as evidence in a dismissal. An attempt to suggest it breached the Human Rights Act failed.

Be careful with “serial complainers”

If you have an employee constantly raising unfounded grievances, you may be tempted to dismiss them on the grounds that trust and confidence has gone. However, if their complaints relate to discrimination (in this case racial) you must be sure that they are made in bad faith, not simply without foundation. An employee who is dismissed because they raise repeated complaints about discrimination (whether justified or not) will win a claim of victimisation. The case is Woodhouse v West North West Homes.

As one leading employment barrister commented on this case: “While it’s clearly legally correct, many employers will sympathise with the employer on this one”

For more information about any of the issues in here, or if you have an HR query, please contact simon@ariadne-associates.co.uk or ring me on 0151 222 0315/07974 174936

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Managing Director

Jonathan trained as a chartered accountant with Price Waterhouse (now PWC) in Liverpool before becoming a small business services manager for Grant Thornton in Warrington. He also spent three years as the financial controller for Brookside and Hollyoaks (not that he ever mentions it!).

Jonathan is recognised as a specialist in the entertainment industry and is often called upon to provide training courses and seminars for media professionals. He's also a bit of a technology geek and has been recognised with the accountancy industry as one of the most progressive accountants in the UK.
Outside of work Jonathan is very proud to be the Treasurer of the Tim Parry Johnathan Ball Foundation for Peace and to be on the Council of the Liverpool Institute of Performing Arts (LIPA)

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