Employment e-Brief – Enterprise and Regulatory Reform Bill Published

The Enterprise and Regulatory Bill started its passage through Parliament on 23 May 2012, following the preview of its contents in the Queen’s speech.

Included in the Bill are a number of employment tribunal reforms as the government wishes to keep costs for businesses down. These include that parties are encouraged to come together and settle early through ACAS early conciliation and a more widespread use of settlement agreements. Claimants will have to first submit details of their claim to ACAS so that use can be made of a 1 month period of pre-claim conciliation. If it is refused or unsuccessful then the claim can proceed to tribunal. The time will stop running on limitation if pre-claim conciliation is entered into, leaving 1 month after the conclusion of that conciliation to present their claim to the tribunal.

All parties will also be encouraged to try and resolve disputes through greater use of settlement agreements formerly called compromise agreements. The renaming is in order to accurately reflect the fact that the agreement being reached is to the satisfaction of both parties. Also like unfair dismissal claims, the EAT will hear cases by a judge alone, unless ordered otherwise.

It is proposed that there will be financial penalties for employers who lose at tribunal of up to half of the total tribunal award made, a minimum of £100 and a maximum of £5,000 applies. If no award is made a penalty can be decided by the tribunal. The amount can be reduced by 50% if paid in 21 days. However the penalty will not be automatic. Quite how this can be a good thing for business, we don’t know!

There will also be an introduction of legal officers to make decisions in cases where all parties agree in writing, as well as a Rapid Resolution scheme to deal with less complex disputes such as holiday pay. It is hoped that by taking the fear out of employment tribunals businesses will have more confidence to take on new employees.

There will also be a power for the Secretary of State to limit the unfair dismissal compensatory award to a maximum between the national median earnings for a year and 3 times that figure. This will therefore be between £26,000 and £78,000. The alternative however is to limit the award to just one year’s earnings. The Bill gives the government power to revise the cap to bring down the level of compensatory awards.

It is hoped that these measures will help make Britain one of the most enterprise-friendly countries in the world.

For further information or advice on any of the issues outlined in this e-Brief, please contact a member of the employment team.