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Employment Law Reforms

Employment Law Reforms

This spring heralds a further raft of employment law reforms of which employers need to be aware. Firstly, there are a number of changes affecting employers facing employment tribunal claims from 6 April.

Before a claimant is allowed to lodge a tribunal claim they will have to notify ACAS who, if the respondent agrees, will usually have up to a month to try to promote a settlement between the parties. This period ‘stops the clock’ on the normal time limits which apply to claims. This early conciliation is optional from 6 April and mandatory from 6 May. ACAS conciliation can still occur in the normal way after a claim has been lodged.

There are new statutory rates which employment tribunals will use to calculate compensation. These include a maximum compensatory award for unfair dismissal of the lesser of 12 month’s average pay or the new cap of £76,574 and a maximum limit on a week’s pay of £464, which is also used to calculate statutory redundancy payments.

Some tribunal fees will also go up as they will be reclassified as Type B claims attracting issue fees of £250 and hearing fees of £950 for a single claimant. These include failure to inform or consult under TUPE and equal pay. The Government has said this was due to an error when they were originally classified as Type A claims!

Tribunals will be able to use their discretion to impose a financial penalty on employers who lose at tribunal where they breach workers’ rights and there are “aggravating features.” The penalty will be 50% of any financial award, up to a maximum of £5,000. The penalty will be reduced by 50% if paid within 21 days.

This ties in with the recent increase in the maximum penalty for employers who flout the national minimum wage from £5,000 to £20,000 and an increase in the penalty for employing illegal workers from £10,000 to £20,000.

Discrimination questionnaires (used by claimants to find out information from employers which may help with their claims) and the time limits for answering them, will be abolished and replaced with non-binding ACAS guidance to help when dealing with these sort of requests.

Statutory sick pay will go up to £87.55 per week. Statutory sick pay record-keeping will be abolished in favour of giving employers the discretion to use a system which suits them. The Percentage Threshold Scheme, which allowed employers to reclaim statutory sick pay in certain situations, is also being removed from 6 April and instead the funds will be used to set up a new health and work service in 2015.

The Government’s proposals regarding tax and NICs in respect of offshore employment intermediaries will also come into effect on 6 April. This has been of particular interest to those operating in the oil and gas sector.

In response to the original consultation document, the Government reiterated that in general terms, employer NICs will be payable for workers on the UK Continental Shelf. However, certain aspects of the original proposals would have created difficulties for the sector in particular the passing of liabilities to intermediaries/end users. On the basis of the responses, the new regime will impose liabilities on an associated company of an offshore employer which is caught by the legislation. This is on the basis that a large proportion of offshore employers in the sector retain a presence or have an associated company in the UK. Where there is no such associated company, licensees will be ultimately responsible for accounting for tax and NICs. In addition, to reduce administrative burden, a certification scheme will be introduced. This means that whilst a certificate is in place, licensees will not be held liable for any failure by the offshore employer regarding accounting for tax and NICs. Finally, in respect of mariners, those working on vessels wholly for the transport of supplies or for safety purposes will be entirely excluded from the scope of the legislation.

There are other changes on the horizon including the introduction of the right to request flexible working for all employees at the end of June. So watch this space!

Claire Scott
Professional Support Lawyer

Burness admin