Change is coming, but not quite yet | Fieldfisher
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Change is coming, but not quite yet

A number of miscellaneous changes to employment legislation are provided for by the Small Business, Enterprise and Employment Bill, due to become law by the end of the month before Parliament is A number of miscellaneous changes to employment legislation are provided for by the Small Business, Enterprise and Employment Bill, due to become law by the end of the month before Parliament is dissolved in anticipation of the General Election. The Bill contains a miscellany of significant changes which will be brought into effect in the next Parliament, there being insufficient time in this Parliament to make the commencement orders that bring most of its individual provisions into effect, with one exception.

The Bill once it has received the Royal Assent will provide the following:

  • Mandatory pay gap reporting.

  • Create a power for the Secretary of State to require reports by prescribed persons (such as regulators) on the whistleblowing disclosures that have been received including mandatory publishing of this information.

  • Prohibition on NHS employers discriminating against job applicants who it is thought have made a protected disclosure.

  • Power to impose penalties on employers who fail to make payment of Employment Tribunal awards and COT3 settlements.

  • Power to limit the number of times an Employment Tribunal hearing can be postponed.

  • Fines for non-payment of the National Minimum Wage to increase to £20,000 per employee under paid.

  • Exclusivity clauses in zero hours contracts to be made void and the possibility of further restrictions in the future.

  • Public sector exit payments to be repaid if the recipient goes back into public service within a prescribed period.

Postponement of ET proceedings

The provision coming into effect immediately is the one that grants powers to Employment Tribunals to limit the number of postponements that can be granted to just 2 per party. If you are involved with a case that has been protracted by multiple postponements, then this new provision may assist you in seeking to ensure no further delay is created by avoidable postponements. However, it is likely to have only limited effect and most commentators consider that the absence of Employment Tribunal Judges or wing members is the more common cause of postponements.

Gender pay gap reporting

All employers of more than 250 employees will be required as from about April 2016 to produce a report detailing the gender pay gap. The provision is dependent on detailed regulations being adopted which will set out the full extent of the obligation. Analogous legislation renders it likely that a failure to produce a report can result in a fine of £5,000. HR and reward specialists should be alive to this new obligation and start planning for the collation of likely data and the framing of a report, using s.78 of the Equality Act 2010 and Regulation 6 of the Equality Act 2010 (Equal Pay Audits) Regulations 2014, as a guide to the types of information that might be required in a report.

Prescribed person whistleblowing reports

Currently an Employment Tribunal can refer a protected disclosure to a prescribed person (for example HMRC or a regulator) where a claimant in tribunal proceedings consents. There is no requirement for the prescribed person to act on the disclosure. This provision at least will require the prescribed person to make an annual report. Again details of the provision will be set out in regulations a draft of which were attached to the Government's consultation response. The report will not identify the whistle-blower or their employer. The provision is unlikely to have any impact on employers, at least in the short term.

NHS whistleblowing enhanced protection

Its proposed that the Employment Rights Act 1996 be amended so that regulations can be made which prohibit NHS employers from discriminating against job applicants who they believe have been whistle-blowers. The expectation is that the awards of compensation that a wronged whistle-blower might expect to recover are similar to those job applicants who are rejected for reasons connected with a protected characteristic. The award could include an award for injury to feeling and a compensatory award, and perhaps even aggravated damages. NHS employers (and the scope of this phrase could have an interesting ambit) should consider their recruitment policies and documentation to stress test it for processes that might help sustain such claims of discrimination.

Non-payment of Employment Tribunal awards and settlements

Currently, an unpaid award or settlement under a COT3 can only be enforced by means of the usual county court and High Court methods. The only penalty for a defaulting employer is that they will have to pay the court costs the claimant has incurred in having to enforce the judgment. Now this new provision will create penalties of 50% of the award of compensation, up to a maximum of £5,000 for those who fail to make payment.

National Minimum Wage penalties

Provision is to be made for penalties for underpayment of the National Minimum Wage to increase from a maximum of £20,000 per employer, to a maximum of £20,000 per underpaid worker. The recent "name and shame" list of employers who have underpaid wages shows that even large employers can fall foul of this legislation. Stress testing your payroll systems would be prudent, to avoid fines and also the adverse impact on corporate reputation, as an employer of choice.

Zero hours contracts

There is a power for the Secretary of State to legislate to make exclusivity clauses in zero hours contracts void and unenforceable. The same power has the scope to permit the making of wide ranging powers to limit the operation of zero hours contracts. Employers should if they use such contracts check whether exclusivity is a stated requirement and if so plan for the elimination of the requirement. Those employers who seek to evade the intention behind this provision run the risk of the next government making legislation that imposes financial penalties on those employers who seek to work around this prohibition.

Public sector exit payments

High earning employees, being those earning £80,000 and above (but with a tapering effect for those earning between £100,000 and £80,000) shall be required to repay in part or in whole a qualifying exit payment which include redundancy payments, payments in lieu of notice, ex gratia payments, payments to reduce the impact of early retirement but do not include any sums said to be payable for injury to feelings for discrimination, where the employee starts into new public sector employment within 12 months of their exit. Regulations can be made to permit the recoupment of all or part of the exit payment from the individual, or either of the public sector employers. Recruitment decisions may have to be flexed to take into account the impact of such claw backs. The provision could have the effect of locking some of the best talent out of the public sector labour market (at least for a period of 12 months).

So a variety of provisions which touch various parts of the work force and which should cause HR professionals to keep a watching eye on the implementing legislation and detail that will be laid out in future regulations.

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