The pace of change never gets any slower in employment law, and I have quite a few consultations and proposals to report. It remains to be seen how many of them will become law, and in what form, but after a couple of well publicised retreats over the budget, and the leaking of the Beecroft Report in advance of its release in slightly different terms, perhaps a considered and thoughtful approach will be taken to them.
I should first confirm what is not happening. The key proposal in the Beecroft report for "compensated no-fault dismissals" has been omitted from the Enterprise and Regulatory Reform Bill which is currently making its way through the Commons. Instead, a clause proposing "new" voluntary settlement agreements (compromise agreements under another name and about which more below) has taken its place and most people are regarding that as the quiet death of Mr Beecroft’s proposal.
It is known that of 135 businesses consulted only 38% were in favour of the proposals which most considered to be unnecessary. Many have commented in the press that they have far more important things to worry about at the moment.
The strength of feeling about Beecroft’s contribution was demonstrated particularly well by an article in The Times (behind paywall) which described the report as "short on evidence and long on recommendations – and the prejudices of its author are never far from view" and this was why it was “leaked, published and strangled at birth in a matter of hours".
So what is to be expected? The Enterprise and Regulatory Reform Bill had its second reading on 11 June and consultations under way include:
– Abolition of the procedure whereby employees who consider they may have been subjected to unlawful discrimination can send their employers a questionnaire to ask why they have been treated unfavourably. Expect an upsurge in Data Protection Act subject access requests, and possibly speculative cases, if this goes through.
– Repealing the provision which can make employers liable for harassment of its staff by third parties, such as customers, if they are aware of the harassment and fail to take reasonable steps to prevent it recurring. This was introduced following a series of cases where third party harassment was considered, including the notorious "Bernard Manning" case. One of the reasons cited for the repeal is that there is no call for it, and in certain circles there seems to be some confusion between this provision and the liability of employers for harassment by their own employees.
– Cutting back on the power of tribunals to make more general recommendations to employers to stop discriminatory practices, where there has been a finding of discrimination against them.
– Reducing the consultation period for large scale redundancies (100 or more staff) from 90 to 45 or 30 days. The intention is to facilitate restructuring. Accordingly it is also intended to improve the quality of consultation by introducing a new, non-statutory code of practice. The protective award will remain as up to 90 days’ pay iif an employer fails to consult with employees.
– The much talked about mandatory gender pay audits are also likely to materialise, albeit in very limited circumstances. They will be required for employers against whom successful equal pay claims are made. They might therefore be regarded as somewhat after the event but, importantly, the audits will apply to the whole organisation rather than just the equal pay claimants. There will be exclusions: if there has been an audit in the last three years, if the employer has "transparent pay practices" or if an employer can show a good reason why it would not be useful. These will no doubt provide for protracted arguments concerning, for example, what is "transparent" and what is "good reason"
The Bill sets out a range of far-reaching measures, some of which relate to employment law and more specifically tribunal claims:
– Introducing a compulsory requirement to submit a claim to ACAS for conciliation before lodging an unfair dismissal claim. This might have some merit, although it has a whiff of the disastrous and counterproductive 2004 discipline and dismissal regulations about it, especially in Schedule 2 which provides for time extensions for bringing claims to allow for the conciliation period. What worries us is whether ACAS will have the resources to conciliate effectively. Many if not most employment lawyers have great regard for the services ACAS conciliators provide, if only you can get hold of one.
– Providing a power to change the cap on unfair dismissal compensatory awards. Rather than the current standard cap for all shapes and sizes of employers, it seems that different caps may be applied to different types of employers. Possible caps could be a year’s pay (actual pay, or pay subject to the cap on earnings used in calculating redundancy payments – it’s not clear which yet, but the latter seems likely), or between one and three years’ median earnings, or the lesser of those.
– Bringing in a power to impose a penalty (paid to the Treasury, not to the employee) of between £100 and £5,000 if there are "aggravating factors" in the case. There is no hint as to what those aggravating factors might be yet and plenty of scope for litigation here in our view.
– As expected, there is provision for appeals from Employment Tribunal decisions to be heard by a single judge in most cases, rather than a panel judge and two lay members, and introducing a new "legal officer" role. The duties of the latter are not set out, but educated guesses are being made that they will deal with the new "rapid resolution" cases.
– The whistle-blowing provisions of the Employment Rights Act are to be changed in an endeavour to prevent the rules being used in disputes about individual contractual terms, by adding a requirement that the employee reasonably believes the disclosure to be in the public interest. But they would think that, wouldn’t they?
– Finally, compromise agreements are to be re-named "settlement agreements". While the new name makes better sense to non-lawyers, it seems a bit of a missed opportunity to make them easier (quicker, cheaper) to draft. I will comment in more detail about these proposed agreement in a separate article.