Sections 3 to 24 and Schedules 1 to 3 of the recent Enterprise and Regulatory Reform Act 2013 and related employment legislation contain provisions which are of interest to anyone involved in employment law. The changes that are likely to be of most interest are as follows:
Reducing the cap on the compensatory award
Section 15 of the Act gives the Secretary of State power to increase or decrease the limits of any compensatory award made by a tribunal. Since this section came into force, the Secretary of State has made an Order which reduces the cap on the compensatory award for unfair dismissal to whichever of the following is lower for the employee in question:
i) £72,400; and
ii) 52 week’s pay.
The cap is likely to have a significantly depressing effect on the value of the compensatory award. The new limits will apply where the “effective date of termination” is after the date on which the order comes into force.
Introduction of fees
With effect from the 29th July, the Claimant will have to pay an initial fee to issue the claim and a further fee if it proceeds to a final hearing. There will be two levels of claim, depending on the type of claim being made. At the lower level, the issue fee will be £160 and the hearing fee £230. For more complex claims, including those for discrimination, equal pay and unfair dismissal claims, the issue fee will be £250 and the hearing fee £950. The aim of the introduction of these fees is to encourage the parties to contemplate mediation or settlement of disputes. However, it may well discourage a number of claimants who cannot afford to pay for representation from bringing claims in the first place.
Whistleblowing
New provisions for whistleblowing have been introduced with effect from 25th June 2013. Under the new rules, a whistleblowing disclosure will now only be protected if it is “made in the public interest”. It is no longer a requirement that the disclosure be made in good faith. However, if a tribunal considers that a disclosure has been made in bad faith (i.e. that it was motivated primarily by money or spite), then it can reduce any compensation award by up to 25%. The Act also introduces the concept of vicarious liability for employers whose staff victimise whistleblowers, though these provisions are not yet in force.
Settlement Agreements
The Act introduces the concept of Settlement Agreements which are intended to replace Compromise Agreements when entered into by an employee who is still in employment. Provided that employers follow the appropriate procedure, they can negotiate exit packages with their employees, without needing to be concerned that their discussions could be used against them in the event that the employee later pursues an unfair dismissal claim. Note that ACAS has also prepared a Code of Practice which is available on its website.