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Employment Law Update – Top 10 things to know

Employment Law Update – Top 10 things to know

Every year brings with it some important new legislation for employers to negotiate. Whether related to employment tribunals, employee-shareholder contracts, family-friendly rights, payroll or criminal record checks, 2013 presents new legislation relevant to organisations both large and small.

Read our guide to the 10 key updates to make sure you are ready for the year ahead.

1. Enterprise and Regulatory Reform Bill is implemented
Among other things, the wide-ranging Enterprise and Regulatory Reform Bill, implements various reforms to the employment tribunal system; The Enterprise and Regulatory Reform Bill implements the following changes to the employment tribunal system. The Bill:

  • requires prospective claimants in an employment dispute to send prescribed information to ACAS for it to attempt a settlement, before lodging their claim;
  • allows for certain employment tribunal claims to be heard by legal officers (who will be appointed in accordance with regulations) if the parties agree;
  • changes the Employment Appeal Tribunal (EAT) rules so that appeals to the EAT will be heard by a judge sitting alone, unless a judge directs otherwise;
  • introduces a power for employment tribunals to order employers that have breached workers’ rights to pay a financial penalty (to the Secretary of State) of between £100 and £5,000 where there are “aggravating features”, the penalty being, in most cases, 50% of the amount of any award that the tribunal has made against the employer; and
  • renames compromise agreements “settlement agreements”.

2. New tribunal award limits come into force
An increase in the limit on the amount of the compensatory award for unfair dismissal is among the changes taking effect on 1 February 2013.

  • The limit on the amount of the compensatory award for unfair dismissal increases from £72,300 to £74,200
  • an increase in the maximum amount of a “week’s pay” for the purposes of calculating a basic or additional award of compensation for unfair dismissal or redundancy payment from £430 to £450
  • an increase in the maximum amount of a guarantee payment payable to an employee in respect of any day from £23.50 to £24.20.

3. Employee-shareholder contracts are introduced
The Government is introducing a new type of employment contract, under which employees will be given shares in exchange for waiving certain employment rights. Announcing the proposals on 8 October 2012, the Chancellor of the Exchequer stated that the Government would bring in legislation so that employers would be able to use the new type of contract from April 2013.

Under the proposals, the Employment Rights Act 1996 will be amended by the Growth and Infrastructure Bill to create a new tier of employment status: employee shareholders, who will receive shares with a value of at least £2,000 in return for giving up specified employment rights. The shares will be exempt from capital gains tax, up to a maximum threshold of £50,000.  Employee shareholders will not have the right to:

  • claim unfair dismissal (except for reasons that are automatically unfair);
  • statutory redundancy pay;
  • make statutory requests to work flexibly (except on return from parental leave, details of which are yet to be confirmed); or
  • make statutory requests in relation to study or training.

Employee shareholders will also have to give 16 weeks’ notice to return early from additional maternity, adoption or paternity leave (as compared with eight weeks for normal employees on additional maternity and adoption leave and six weeks for normal employees on additional paternity leave).

However, employee shareholders will be able to claim unfair dismissal in relation to nearly all of the automatically unfair reasons, such as making a protected disclosure. They will also retain protection against discrimination, including in relation to dismissal.

4. Unpaid parental leave increases to 18 weeks

The right to unpaid parental leave increases from 13 weeks to 18 weeks from 8 March 2013. Every employee who is the parent of a child can take up to 18 weeks’ unpaid parental leave during the first five years of the child’s life. Adoptive parents must take their parental leave by the fifth anniversary of the adoption or by the child’s 18th birthday, whichever occurs sooner.

5. DBS checks (formerly CRB checks) are portable
Disclosure and Barring Service (DBS) checks (formerly Criminal Records Bureau (CRB) checks) are portable between employers, from March 2013.

On payment of a fee, employers that register with the DBS can, in conjunction with job applicants for designated posts, apply for access to standard and enhanced criminal records checks. The DBS was created by the merger of the CRB and the Independent Safeguarding Authority (ISA) on 1 December 2012. As a consequence, CRB checks are now referred to as “DBS checks”. Standard checks may be made where a post is exempt from the provisions of the Rehabilitation of Offenders Act 1974, while an enhanced check is appropriate where the job involves working with vulnerable groups in a regulated activity as the disclosure can include information about whether or not the individual is on either of the barred lists held by the DBS (formerly held by the ISA).

The Protection of Freedoms Act 2012 includes provisions to effect changes relating to DBS checks. A new updating service is due to be introduced so that, once a DBS check has been completed, the results are available online for employers to confirm that no new information has been added since the check was originally conducted. This means that DBS checks will be portable, and that an employee will not have to have a new check every time he or she starts a new job

6. Collective consultation period is reduced to 45 days
The 90-day consultation period where 100 or more redundancies are proposed reduces to 45 days from 6 April 2013.

In its consultation, the Government also highlighted three key elements to achieving a better redundancy process: a straightforward legislative framework; a positive relationship between the employer and employee representatives; and improved procedures to allow appropriate Government engagement.

The Government’s response to the consultation confirms that it will:

  • reduce the 90-day consultation period where 100 or more redundancies are proposed to 45 days;
  • ask ACAS to issue a non-statutory code of practice that will address the key principles of redundancy consultation; and
  • exclude fixed-term contracts that have reached their agreed term from the obligation to consult collectively.

7. Real-time information for payroll

 Employers are required to use real-time information to report payroll deductions before or when they make them, from 6 April 2013 unless a different date is agreed. The traditional processes for starters and leavers and at the year-end are to be enhanced and partly superseded by “real time information” (RTI). RTI involves employers reporting deductions to HM Revenue and Customs (HMRC) prior to, or at the time of, paying staff rather than once a year. Therefore, once an employer is using RTI, it will no longer need to submit forms P14 and P35 as HMRC will have accumulated the equivalent information from the separate reports that it has made during the year on the occasion of each payment.

8. Statutory maternity, paternity, adoption pay increase

The standard rates of statutory maternity, paternity and adoption pay increase from £135.45 to £136.78 per week from 7 April 2013.

9. Rate of statutory sick pay increases

The standard rate of statutory sick pay increases from £85.85 to £86.70 per week on 6 April 2013.

10. Fee for bringing employment tribunal claim imposed

The charging of a fee in employment tribunals, under which the claimant has to pay an initial fee to issue a claim and a further fee if the claim proceeds to a hearing, is introduced in summer 2013.

The Government states that the aims of the fee system are to ensure that people using employment tribunals contribute to the cost of running the system where they can afford to do so, rather than the full cost being met by the taxpayer, and to encourage people to look for alternatives, such as mediation, before going to the employment tribunal.

There will be two levels of claim:

  • For level 1 claims, the issue fee is £160 and the hearing fee is £230.
  • For level 2 claims, the issue fee is £250 and the hearing fee is £950.

Whether a claim attracts level 1 fees or level 2 fees will depend on the type of claim. Level 2 claims are those that are likely to be more complex and take more time to determine. Level 1 claims include unlawful deduction from wages, holiday pay, and redundancy payment claims. Level 2 claims include discrimination, equal pay and unfair dismissal claims.

Watch this space…

There are a number of other employment law developments that are in the pipeline, but for which no date has been set, or proposals that are expected to progress in 2013.


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