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Enterprise and Regulatory Reform Bill
While the final version of Adrian Beecroft’s views on employment law reform has dominated the news headlines this week, the Business Secretary Vince Cable laid a new bill before Parliament yesterday – the Enterprise and Regulatory Reform Bill.
The bill covers a range of issues, but within Part 2 & Schedule 2 presents proposed amendments to employment law procedures. Among its employment law reforms, it will introduce a requirement for claimants to seek conciliation before an employment tribunal claim; give tribunals a power to impose a financial penalty of employers that breach an individual’s rights; and address other matters that arise from current legislation.
Part 2 & Schedule 2 of the bill deal with employment law matters, and includes either changes to employment laws, or – more guarded & worrying for some – authority for the introduction of secondary legislation (which convention means it normally passes through parliament without formal objection).
Requirement to contact ACAS
Before a claimant can bring a claim to an employment tribunal, they will be required to contact ACAS, who will “endeavour to promote a settlement between the persons who would be parties to the proceedings” – an amendment to the Employment Tribunals Act 1996. Without completing this step and receiving a certificate that a settlement was not possible within the prescribed period, a claimant will not be permitted to proceed with a claim to an employment tribunal.
The actual details of information to be sent to ACAS are not defined, but will be introduced under further regulations (section 7(11)).
It is not clear how long the “prescribed period” will last, as this too will be subject to secondary legislation.
Financial Penalties
Where a tribunal concludes that an employer has breached any rights of a worker (or an applicant for a job), and this breach has one or more aggravating features, the tribunal may order the employer to pay a penalty to the Secretary of State of between £100 & £5,000. This penalty will be reduced by 50% if paid within 21 days.
Compromise Agreements
Compromise Agreements will be renamed “Settlement Agreements”; no other changes to their nature are included in the bill.
Decisions by Legal Officers
A new position of “legal officer” will be introduced to employment tribunals. These persons will be able to determine matters if the parties to proceedings consent to this.
This position are intended to support a “Rapid Resolution” scheme for simple or low value claims, the sort of claim – perhaps holiday pay due – that can currently be dealt with by an Employment Judge sitting alone in a one-hour hearing. There won’t be a hearing though, which is intended to provide a small saving for parties to these claims.
Variation of Compensatory Awards
In unfair dismissal cases, the Act will give the Secretary of State the power to vary the limit of compensatory awards. This will include the possibility of different amounts for different “employers of different descriptions”; the expectation is that this clause will be used to limit the value of a compensatory award for smaller employers.
Second Reading
The first opportunity for MPs to discuss the bill – second reading – is expected to be on 11 June.
Given the reliance on secondary legislation, which won’t be published at least until the bill receives Royal Assent – becomes law – much of what the Government intend to do with this will remain uncertain until the statutory instruments are published.
Conclusion
A view already popular in legal circles is that this legislation will create as much confusion & complication as the now repealed Statutory Dispute Resolution Procedures, the obvious difference being that appeals will need to be sent to ACAS instead of the previous employer – effectively an extra tier of regulation, as settlements are no more likely if conciliation is obligatory to now, when conciliation is engaged in by the parties to a tribunal anyway, so it’s arguable whether it will actually achieve the result of streamlining the existing system or instead creating an extra burden & cost.
What other changes are actually introduced as part of this legislation will only become known once the secondary legislation is published. The controversial proposal from the recently published Beecroft Report, “No Fault Dismissals”, will not be included in the reforms, but whether changes to awards & fees will help encourage employment within SMEs is open to question, as potential employees may be deterred from employment where compensation for unfair dismissals would be limited due to the “description” of the employer – why would potential employees want to take the risk, if they have more employment benefits & protection if they work for a larger employer? The Government suggests it is not “planning to take forward” some issues from the Beecroft report, including “exempting micro businesses from various employment laws” [paragraph 18], but that language doesn’t exclude it from introducing variations to employment laws