Member Article

A round-up of the latest employment law changes and how they impact UK employers

Despite the fact that we have seen a number of employment law amendments in the last year, major employment law changes have traditionally been restricted to April and October to make the transition easier for UK employers.

In accordance with that tradition, a wide range of new employment law changes came into effect on 6 April that have a big impact on both UK employers and employees. Here is an overview of the changes and how they might affect your business and workforce.

ACAS Early Conciliation Scheme

An early conciliation scheme has been launched through the Advisory, Conciliation and Arbitration Service (ACAS) to help reduce the number of employment tribunal claims. The scheme requires employees with grievances against their employer to consider participating in dispute resolution through ACAS before they can lodge a claim before an employment tribunal. The attraction for employees will be that, unlike the tribunal, the conciliation service is free to use, so, if a settlement can be reached, there is no requirement to pay a fee.

Access to the scheme was made available on 6 April and will become compulsory for tribunal claims lodged on or after May 6, 2014. There is no obligation to take part in conciliation, but if an employee attempts to submit a tribunal claim without first contacting ACAS it will not be accepted. For disputes that cannot be resolved through the scheme, ACAS will issue a certificate confirming that the grievance was filed in compliance with the new law, allowing the issue to progress to employment tribunal.

The process will lead to important changes to the time limits for presenting employment tribunal claims. Typically, claims have to be submitted within three months. Contacting ACAS stops the ‘clock’ until a certificate indicating that the parties do not want to conciliate or that no settlement has been reached has been issued. Additionally, employees are guaranteed at least a month from the date the certificate is issued by ACAS to submit their claim.

Financial penalties for employers

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 ‘aggravating features’ are present. Although the term ‘aggravating features’ is not defined, there will clearly be a risk for employers where claims involve long or repeated breaches of employment laws, or allegations that the employer’s conduct has been deliberately malicious or negligent. As a general rule, the minimum penalty will be set at half of any financial award made to the employee.

Abolishment of discrimination questionnaires

In an effort to reduce red tape in employment law, the Government is abolishing the mandatory requirement for employers to respond to discrimination questionnaires submitted by employees with a potential discrimination claim. However, ACAS guidance suggests that employers should still respond to relevant questions about discrimination, as refusal to provide information about issues related to equality could reflect poorly in any subsequent tribunal proceedings.

Amended employment tribunal fees

In July 2013, new employment tribunal fees were introduced and certain types of claims were allotted specific issue and hearing fees. Fee amounts depended on whether the claim was categorised as ‘Type A’ or ‘Type B’ – which were more expensive.

Certain potentially complex employment claims, like equal pay, had been incorrectly categorised as falling under the less expensive ‘Type A’ fees list, when they should have been classified as ‘Type B’. This retrospective change does not apply to claims presented before 6 April 2014, but will affect claims in those areas from now on.

Pension rule changes

Change to the rules regarding TUPE and employee pensions have come into effect. A new employer now has the option of matching the previous employer’s level of pension contributions. Previously, new employers had no option but to match the employee’s chosen contribution rate up to 6%.

Under current auto-enrolment rules, employer contributions are limited to one or two per cent. This may have placed some employees in a much more favourable position than they would have been in had they not transferred, therefore encouraging the government reform.

Employee pay adjustments

Statutory payments were revised to take inflation into account on 6 April, increasing maternity pay, ordinary, additional paternity and adoption pay from £136.78 to £138.18.

Statutory sick pay has increased from £86.70 to £87.55, although the biggest change for employers is that the statutory sick pay percentage threshold scheme has now been abolished. This threshold allowed employers to recover amounts of statutory sick pay from HMRC, where the total amounts paid exceeded 13 per cent of their Class 1 National Insurance contributions bill.

Employment tribunal compensation limits increase

The maximum amount of a week’s pay for calculating a basic award for unfair dismissal, redundancy pay, as well as a number of other awards, has increased to £464, with a new maximum basic award/redundancy payment of £13,920.

The maximum compensatory award for unfair dismissal has risen from £74,200 to £76,574; however, there is an additional cap of one year’s salary on the compensatory award, which came into effect on 29 July 2013.

Penalties for employing illegal workers increase

The maximum civil penalty for employing workers who do not have the right to work in the UK has increased from £10,000 to £20,000, strengthening immigration controls and sending a clear message to employers.

In conclusion, despite the significant number of employment law changes that have come into effect, the Government’s aim overall appears to be focused on reducing red tape and simplifying processes for both employers and employees.

This was posted in Bdaily's Members' News section by Gateley .