Settlement Agreements and Employment Law Reforms

On 6 April 2014 a raft of important employment law reforms will come into force. Here is a brief summary of 6 of the key changes.

1. Introduction of ACAS early conciliation

A new system of ACAS early conciliation or “EC” will come into operation on 6 April 2014. The system will be optional between 6 April 2014 and 5 May 2014 and compulsory for all new Employment Tribunal claims issued after 6 May 2014.

Under the EC scheme, prospective claimants in “relevant proceedings” will be required to lodge a form with ACAS before submitting a claim to the Employment Tribunal. During the EC process, the time limit for issuing the claim with the Employment Tribunal will be suspended. At the end of the EC process, ACAS will issue the prospective claimant with a certificate, which will contain a unique reference number. The prospective claimant will not be able to issue their Employment Tribunal claim without the EC certificate.

2. Introduction of financial penalties for employers who lose Tribunal claims

Employment Tribunals will have a new discretionary power to impose financial penalties of between £100 and £5,000 on employers who lose Employment Tribunal claims where there are “aggravating features” present. Aggravating features is not defined and ultimately this will be for the Employment Tribunal to decide taking into account any factors which it considers relevant, including the circumstances of the case and the employer’s own particular circumstances.

Employment Tribunals will be able to impose the penalty irrespective of the nature of the remedy awarded, although where a financial award is made the penalty must be 50% of that award (subject to the overall cap of £5,000). The employer's ability to pay the penalty must also be taken into account.

Explanatory notes to the legislation provide non-exhaustive guidance on the sorts of matters that may be taken into account. Factors more likely to lead to the imposition of a penalty are where the employer is a large organisation with dedicated HR Support, where there are long or repeated breaches of employment laws or deliberate, malicious or negligent behaviours. Mitigating factors less likely to lead to a penalty include it being a small or newly-established employer with limited HR support; short or one-off breaches and/or where the matters complained of amount to honest mistakes.

3. Repeal of the statutory questionnaire procedure

The statutory framework under which individuals can ask questions about discrimination in the workplace will be repealed on 6 April 2014.

This is good news for employers who, under the old regime often would be faced with discrimination questionnaires served only as a litigation tactic to drive up costs and to extract information from an employer for use in proceedings before the disclosure exercise properly got underway.

The statutory framework will be replaced by non-legislative best practice ACAS guidance setting out how job applicants and employees can ask questions about discrimination and equal pay under the Equality Act 2010 and how employers should respond to such questions.

4. Employment disputes: amendments to the Employment Tribunal fees system

A new system of charging fees in the Employment Tribunal system was introduced on 29 July 2013. Under this system, claims now brought in the Employment Tribunal attract an issue fee and a hearing fee. The level of fee depends on whether the claim is categorised as ‘Type A’ or ‘Type B’, with Type B claims attracting a higher set of fees.

From 6 April 2014, certain claims which had been incorrectly categorised as Type A will be re-categorised as Type B, thereby attracting higher fees. This includes equal pay claims, claims of a failure to inform and/or consult under TUPE 2006 and certain claims under the Working Time Regulations 1998. This change will not be retrospective and so will not apply to claims presented before 6 April 2014 in relation to hearings after this date.

5. TUPE and pensions

As of 6 April 2014, the new employer (transferee) will have the option of matching the old employer’s (transferor) level of employee contributions. This represents an alternative to the existing position whereby a transferee must match the employee’s chosen contribution rate up to 6%.

The Government elected to introduce this reform to avoid employees being in a more favourable position than they would have been in had they not transferred.

6. Whistleblowing

The Public Interest Disclosure (Prescribed Persons) (Amendment) Order 2014 will amend the list of prescribed persons to whom a protected disclosure may be made to From 6 April 2014, the list will be expanded to include MPs.

The reason for this change is that MPs are considered to be well placed to make representations on behalf of whistleblowers.

If you are involved in any type of dispute or need confidential advice on a settlement agreement or any other legal matter then please book a free consultation to suit you now. digg stumbleupon buzzup BlinkList mixx myspace linkedin facebook google yahoo