Changes afoot for employment law

On 6 April 2014 a number of important changes to employment law came into force. Here we explain what those changes are and what they mean for you in practice.

1.  Increase in rates and tribunal award limits

2.  ACAS early conciliation

3.  Financial penalties for employers who lose tribunal claims

4.  Changes to SSP

5.  Bye bye discrimination questionnaires


1. Increase in rates and tribunal award limits

This annual event has moved from February to April and, as a result of now being index-linked, a week’s gross pay for calculating a redundancy payment or the basic award for unfair dismissal purposes is now capped at the memorable figure of £464.  The maximum compensatory award for unfair dismissal has also increased to £76,574 (or one year’s gross pay if less) and the prescribed weekly rates for maternity, paternity and adoption leave have increased to £138.18.


2. ACAS early conciliation

Before anyone can issue a claim to an employment tribunal, they will have to go through a period of early conciliation (EC) via ACAS. This process is being introduced with the explicit intention of reducing the number of tribunal claims and will be optional until 6 May but compulsory after that.

In almost all cases this will mean a potential claimant must send an EC form to ACAS, who will then take brief details of the claim from them. ACAS will then contact the potential respondent and try to broker a settlement. Unless either party doesn’t want to take part, the EC period will normally last for a calendar month or a further two weeks if settlement looks likely. As now, ACAS will deal with representatives if they are appointed. If no settlement is reached by the end of the EC period or ACAS can’t contact either party, they will issue an EC certificate containing a unique reference number. A claimant must have that reference number to issue a claim to an employment tribunal.

This process will have a knock-on effect on limitation dates and time will stop running from the date the EC form is received by ACAS until it issues the EC certificate. In practice, this extension of time is itself likely to lead to litigation in the same way that the old statutory procedures did - not quite what the Government had in mind!

So what does this mean for employers? Well, if you have any prospective tribunal claims you can expect to hear from ACAS before an ET1 arrives in your in-tray. This is likely to be attractive to potential claimants now they have to pay fees but possibly less so for employers. However, as you don’t have to engage in the process, if you would rather wait and see if the issue fee means no claim is ever submitted or simply defend the claim, then you are free to do just that. The process does give employers the opportunity to settle a low value claim at a very early stage if that is commercially sensible for them. Some speculate that EC may have the unintended consequence of encouraging claimants to proceed with their claims. We will have to wait and see.


3. Financial penalties for employers who lose tribunal claims 

This is another example of a tribunal being able to punish a losing respondent rather than simply compensating a victorious claimant (the money going to the Secretary of State rather than the claimant) and one which sits a little uncomfortably with the Government’s red tape challenge.

A tribunal will have the option of imposing a financial penalty on an employer which loses a tribunal claim only if there is an “aggravating feature”. The penalty must be between £100 and £5,000 and, subject to those limits, will be 50% of any financial award made to the claimant. Unfortunately, it is not completely clear what would amount to an “aggravating feature” as the guidance issued to date leaves it up to individual tribunals to consider any factors they consider relevant. One crumb of comfort can be taken from indications that genuine mistakes will not be penalised.

This potential penalty is another reason to ensure that you have sensible policies in place for dealing with common workplace issues and that managers are well trained in dealing with them. In some cases, it may also be another incentive to settle.


4. Changes to SSP

In the longer term the Government is planning to introduce a form of state funded occupational health service. This service will be funded by costs savings arising from abolishing the Percentage Threshold Scheme (which gives employers with higher than average SSP liabilities a rebate against their National Insurance bill) which is due to take effect in April. The rules about SSP record-keeping will be relaxed but not abolished at the same time.

Employers whose SSP bill is higher than 13% of their gross National Insurance bill will lose their rebate on the excess over 13% from April. The upside, in the form of the free occupational health service, is not expected until 2015 at the earliest.


5. Bye bye discrimination questionnaires

Finally, April will also spell the end for discrimination questionnaires although it was opposed by over 80% of respondents to the consultation. This means the end of the formal process of employees being able to put written questions to their employers and a tribunal drawing inferences from incomplete or evasive answers. This was often a time-consuming task but could also be really helpful in clearing up misunderstandings or showing certain allegations to be unfounded.

In practice, employees or their representatives are still likely to write to employers with questions about allegations of discrimination and it would not be sensible simply to ignore such requests for information. Tribunals will typically expect employers to treat allegations of discrimination seriously and an employer who ignores legitimate and reasonable enquiries will not impress a tribunal panel so in practice this change is unlikely to have any discernible impact in most cases.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.