update

Despite the fact that the last year has seen a number of employment law amendments, it has been traditional to restrict the introduction of major employment law changes to April and October in order to make transition easier for employers.

In line with that tradition, the 6 April 2014 saw a wide range of new employment law changes that have a big impact on both employers and employees.

Probably the biggest is the introduction of the ACAS early conciliation scheme, as mentioned in our conciliation comes first blog post.  Access to the scheme was made available from 6 April 2014. However, it becomes compulsory for tribunal claims lodged on or after 6 May 2014. So from 6 May if an employee attempts to issue the tribunal claim without first contacting ACAS, the claim will simply not be accepted.

This will not mean that there is an obligation to take part in conciliation, though. The employee or the employer may reject the idea. However, contact must be made in all cases in order for ACAS to issue a certificate to confirm compliance with the new duty. Only with the certificate will the employee be able to commence proceedings.

The process will lead to important changes to the time limits for presenting claims. Most Employment Tribunal claims have to be submitted within three months. Once contact is made with ACAS the ‘clock stops’, only starting again when the certificate is issued indicating that the parties do not want to conciliate or that no settlement has been reached. There is also the guarantee that the employee will have at least a month from the date the certificate is sent to issue proceedings, so that if issued during the last month before the deadline to issue expires or, indeed, after the three-month period for issuing proceedings has expired, the employee is allowed one further month in which to submit their claim.

The aim is to reduce claims in the Employment Tribunal. The attraction for employees will be that unlike the tribunal the conciliation service is free to use, so that if a settlement can be reached there is no requirement to pay a fee.

Whilst avoiding payment of a fee will clearly appeal to the employee, it is another new employment law development, the introduction of fines, that may encourage employers to consider early conciliation. From 6 April, Employment Tribunals have a new discretionary power to impose financial penalties of between £100 and £5,000 on employers who lose Employment Tribunal claims where there are ‘aggravating features’ present. The term ‘aggravating features’ is not defined but where there are long or repeated breaches of employment laws or deliberate, malicious or negligent conduct, the employer will be clearly at risk. Generally where there is a financial award made to the employee the penalty will be set as a minimum at half of the award.

Discrimination questionnaires are also to be abolished. Although in practice where the employer is asked specific questions about an equality issue and refuses to respond it will not look good in any subsequent tribunal proceedings. Best practice ACAS guidance suggests that employers should still respond to relevant questions about discrimination.

There were also changes to the Employment Tribunal fees. When fees had been introduced last July, certain potentially complex employment claims, like equal pay, had been incorrectly categorised as falling under the cheaper Type A list when they should have been under the more expensive Type B list.

Changes were also made to the rules regarding TUPE and pensions. The new employer now how has the option of matching the old employer’s level of pension contributions. Previously, the new employer had no option but to match the employee’s chosen contribution rate up to 6%. Taking into account the fact that under auto enrolment employer contributions are currently limited to 1 or 2%, this may have placed some employees in a much more favourable position than they would have been had they not transferred.

The 6 April is also the date when statutory payments are updated to take into account inflation. So maternity pay, ordinary, additional paternity and adoption pay has risen from £136.78 to £138.18.

Statutory sick pay has increased from £86.70 to £87.55, though the bigger change for employers is that the statutory sick pay percentage threshold scheme has been abolished. This had allowed employers to recover amounts of statutory sick pay from HMRC where the total amounts paid exceeded 13% of their Class 1 National Insurance contributions bill. This may increase costs for some but the administrative burden on employers will be reduced overall with the repeal of the record keeping requirement for statutory sick pay purposes.

Agency costs may go up though, as false self employment arrangements are being targeted by HMRC. From 6 April, a much stricter test will be applied in relation to agency workers and their self employment status so that if an agency worker is personally carrying out work under the control of another, they will be deemed to be employed for income tax purposes. The fact that they may be under no obligation to do the work personally so may not qualify for employee rights, will not change.

For the first time, the annual increase in Employment Tribunal compensation limits has also taken effect on 6 April, rather than at the start of February as in previous years. The maximum amount of a week’s pay for calculating a basic award for unfair dismissal, redundancy pay and a number of other awards has changed to £464 and the new maximum basic award/redundancy payment is £13,920. The maximum compensatory award for unfair dismissal has gone up from £74,200 to £76,574. Though it has to be remembered that since 29 July 2013, there has also been an additional cap of one year’s salary on the compensatory award for unfair dismissal.

The compensation limits apply where the event giving rise to compensation or payment occurs on or after 6 April 2014. For example, in the case of unfair dismissal the rates apply to all dismissals where the effective date of termination falls on or after this date. Where the dismissal or relevant event falls before 6 April, the old limits will still apply, irrespective of the date on which compensation is awarded.

Immigration controls are strengthened as the maximum civil penalty for employing workers who do not have the right to work in the UK has been increased from £10,000 to £20,000.

Lastly an amendment has been made to the Whistleblowing legislation, which adds MPs to the list of prescribed persons to who a disclosure could be made if it was appropriate to inform an MP of the wrongdoing.

For more information, email blogs@gateleyuk.com.


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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.