Why do the latest employment law changes matter to me?

We’ve discussed the many changes that have been happening in employment law for many ebulletins now. The reason we have spent so much time on them is that the changes are significant and will have a huge impact on employers and employees alike. Also, they haven’t stopped, with amendments and revised dates a constant feature of the reforms. Just this month the Government announced the implementation dates for settlement agreements and a new statutory cap on compensation awards in unfair dismissal claims. We’ve had to update our timetable of changes again (sorry!) – please see the updated article and printable version of the timetable here.

The question on many people’s lips is “why do the latest changes matter to me?” It’s a good question, and one we have attempted to answer in relation to some of the main changes below.

• Settlement Agreements

For starters, this will be the new name for ‘Compromise Agreements’. As reported previously, the idea is that where a Settlement Agreement has been offered, an employee will not be able to use or refer to the Settlement Agreement in an ordinary unfair dismissal claim. A new statutory Code of Practice will be in place to assist employers interpret the requirements.

For employers, the Government claims this is a process which employers can use to have ‘open discussions’ with employees. However, there are potential pitfalls which employers should be wary of, especially in regard to admissible and inadmissible parts of a discussion. We suggest that employers seek advice before offering a Settlement Agreement.

We have a useful article on whether you can still use Compromise Agreements here.

For employees there is little that may affect them, unless their employer starts a discussion about a Settlement Agreement with them!

• Unfair dismissal cap

Previously, the cap on the compensatory element of an unfair dismissal award made by an Employment Tribunal was £74,200. The cap will be changed on 29 July 2013 to the lower of either £74,200 or one year’s pay for that individual.

The award of one year’s pay was not a regular occurrence in the Employment Tribunals anyway, despite some perceptions to the contrary. However, this change will help to manage expectations of awards in unfair dismissal case for both Respondent employers and Claimant employees. However, high-earning employees will see the greatest impact on the potential value of their unfair dismissal claim.

• Fees in the Employment Tribunals

The impact is obvious for those seeking to issue and pursue claims; they will now have to pay the fee or go through the remission system (please see our article on fees here).

As to employers, the question is whether this will reduce the numbers of claims – the answer is it may well do. Also, the potential for a successful claimant to get their fees back is likely to be an additional factor when considering the potential settlement of claims.

For employment law practitioners, the change in process is significant and the issuing of a claim has become more complex, as well as adding to matters to consider when advising on claims.

• Whistleblowing changes

The increased protection for whistleblowers has been motivated by the Government’s aim for employers to take whistleblowing far more seriously. Whistleblowing claims are complex anyway and specific on the particular facts of the case. Therefore, new cases involving whistleblowing claims will certainly involve consideration of the new law. The removal of the requirement for disclosures to be made in good faith is a significant change, as many claims brought by workers have failed in the past because of the claim not meeting the good faith requirement. That said, the added requirement that disclosures are made in the public interest arguably adds a new hurdle for workers bringing a whistleblowing claim.

For employers, there is also a necessity to be aware that they can now be vicariously liable should a whistleblower suffer victimisation at the hands of their colleagues. Whistleblowing policies may need updating to reflect this, and should a worker whistleblow it may be necessary to ensure that that worker has an effective way to report any victimisation and for it to be dealt with promptly so as to limit any liability for the employer.

• Employee Shareholders

The introduction of employee shareholders in September is not likely to have a major impact, unless an employer is choosing to offer this type of employment to new or existing employees! We suspect the uptake of this will not be great.

If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).

Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.