EMPLOYMENT LEGISLATION IN Summary Timetable of known changes:

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1 EMPLOYMENT LEGISLATION IN 2014 Despite 2014 being the last full year of office of the present coalition government, we can expect no slackening in the pace of employment law reform. The year ahead will see a number of measures which have been set out in earlier legislation go live. But there is also scope for new developments, with a number of matters already the subject of government consultation, as well as some outstanding case law issues whose resolution could have a major impact on the way existing employment law is interpreted and applied. Steve Vale, HR consultant, looks at the year ahead from the perspective of public sector employers, and summarises what will, as well as what might, happen in the year ahead. 1. Summary Timetable of known changes: The timetable below summarises, as far as possible, the key items of employment legislation known to be intended for introduction during With the government s continuing commitment to employment law reform in mind (and bearing that 2014 is the run-up year to a general election), there could also, potentially, be new legislation introduced during the year which cannot be anticipated at this stage. LEGISLATION Revised TUPE Regulations The Transfer of Undertakings (Protection of Employment) Regulations 2013 (TUPE) will introduce changes to the current Regulations which, amongst other things, allow for harmonisation of terms of employment derived from collective agreements and allow a change of work location to be covered in the definition of economic, technical or organisational reasons entailing changes in the workforce (the ETO defence). COMMENCEMENT DATE 31 st January 2014 See below for full details of the changes to TUPE Increase in financial penalty for not paying the National Minimum Wage Employers who do not pay their workers the National Minimum Wage (NMW) will face an increased penalty the government has announced that it will increase the financial penalty percentage from 50% to 100% of the unpaid wages owed to workers. The maximum penalty will increase from 5,000 to 20,000. Abolition of statutory questionnaire procedure. The statutory questionnaire procedure (s.138 of the Equality Act 2010), which allows employees to use a pro forma questionnaire to refer certain questions to their employer regarding their treatment at work either before or after commencing tribunal proceedings, is set to be abolished. February 2014 (date not yet specified)

2 LEGISLATION New rates of statutory maternity pay etc. The Government has announced that statutory maternity, paternity and adoption pay will increase from to per week. The earnings threshold for these benefits will increase from 109 to 111. New rates of statutory sick pay The Government has announced that statutory sick pay will increase from to per week. The earnings threshold will also rise from 109 to 111. COMMENCEMENT DATE Increases in statutory redundancy pay and in the compensatory award for unfair dismissal See below for more details Right to request flexible working extended to all employees The right to request flexible working will be extended to all employees (not just parents and carers) and the current statutory process which employers must follow in dealing with flexible working requests will be abolished. A new Code of Practice on handling requests in a reasonable manner will be published to accompany the legislation. (subject to confirmation, see below) See below for more details Acas pre-claim conciliation Employment tribunal claimants will be required to submit a form to Acas before they can lodge the claim with the tribunal See below for more detail ET Penalties on employers Provisions giving Employment Tribunals the discretion to impose financial penalties on employers who are found to have breached employees rights are expected to be implemented. April 2014 See below for more detail Pensions auto-enrolment Medium sized employers (50 to 249 workers) will have to start automatically enrolling their workers (where applicable) from April 2014 (Large employers were required to do so in the period October 2012 to February 2014) April 2014

3 LEGISLATION Mandatory Equal Pay Audits Employment Tribunals will be given powers to order employers who have breached equal pay law to carry out an equal pay audit designed to identify action to be taken to avoid such breaches occurring or continuing. COMMENCEMENT DATE October 2014 See below for more detail National Minimum Wage Expected annual adjustment. See note below. October Known changes in more detail: Increases in statutory redundancy pay and in the compensatory award for unfair dismissal Annual increases to statutory redundancy pay and the basic award of compensation for unfair dismissal will henceforth be implemented in April each year, rather than on the previous usual date of 1 st February. The change to the previous timetable was signalled in Section 22 of the Enterprise and Regulatory Reform Act It follows on from the changes introduced in February 2013, which limited unfair dismissal compensation to a maximum of 74,200 or 52 weeks salary, whichever is the lower. New rates will apply from, but these have yet to be announced. The Transfer of Undertakings (Protection of Employment) Regulations 2013 The changes to the current TUPE regime introduced by these Regulations are: The service provision change rules will be amended so that, for a service provision change to fall within TUPE, the activities carried on after the change must be fundamentally or essentially the same as those carried on before the change. Current legislation distinguishes between dismissals that are due to the transfer itself and those which are connected with the transfer. The former are always automatically unfair, while the latter may be defended if the reason for them is an economic, technical or organisational reason entailing changes in the workforce (the ETO defence). The regulations are to be amended so that the ETO defence can be used in respect of dismissals that are due to the transfer itself, and dismissals connected with the transfer will no longer be automatically unfair in every case. The Government is to issue Guidance on this. A parallel change will apply to the restrictions on changing employees terms and conditions following a transfer, with the result that some changes which are for a reason connected with the transfer will be permissible. One problem that applies to this change and to the one above is that the distinction between the transfer itself and connected with the transfer is not entirely clear. The ETO defence will be widened to include changes to workplace location, thus allowing employers to relocate transferring employees. This amendment will also prevent genuine place of work redundancies from being automatically unfair.

4 The renegotiation of terms derived from collective agreements (for example for the purpose of harmonisation) will be allowed one year after the transfer, provided that the changes are no less favourable overall to the affected employees. A static approach will be applied to terms and conditions derived from collective agreements so that the new employer will not be bound by any terms agreed after the date of the transfer where they have not been party to the collective bargaining process. TULR(C)A is to be amended to the effect that where the transferee employer begins consultation before the transfer, this will count for the purposes of complying with the collective redundancy consultation rules in the event of post-transfer redundancies. Micro businesses (those with 10 or fewer employees) will be able to inform and consult affected employees directly where there is no recognised independent trade union or existing appropriate representatives. Employee liability information will have to be provided by the transferor at least 28 days before the transfer. This will give transferee employers more time to prepare for the transfer. The Department for Business, Innovation and Skills has published a guide to the new TUPE Regulations for employees, employers and representatives this is available at employment-rights-on-the-transfer-of-an-undertaking.pdf Right to request flexible working Under Section 8 of the Children and Families Bill, the Government intends to extend the right to request flexible working to all employees, not just those who are parents or carers (as is the case at present). Employees will still need 26 weeks continuous service in order to be eligible. Additionally, the statutory procedure for considering requests is to be removed and will be replaced by a duty to consider requests in a reasonable manner and within a reasonable timescale. The Arbitration and Conciliation Service (Acas) is to issue a statutory code of practice to provide guidance on this and tribunals will be required to take the code into account when considering complaints. It has recently published its response to consultation on the draft of this code, and has indicated that the final version will make it clear that it is good practice to allow an appeal if a request is refused, and to enable employees to be accompanied by a work colleague at any such appeal. The scheduled date for the implementation of the new right was, but, at the time of writing, there are reports that the target date for Royal Assent of the Children and Families Bill has been delayed, which may mean that both the implementation of the new right and the abolition of the statutory request procedure will have to be rescheduled for later in the year. Acas pre-claim conciliation The Government has confirmed that it intends to introduce a requirement for potential tribunal claimants to submit a form to the Arbitration and Conciliation Service (Acas) before they can lodge the claim with the tribunal (there will be no requirement to provide details of the claim at this stage). The aim of this measure is to allow early conciliation to take place in an attempt to resolve disputes without recourse to the tribunal system. There will, however, be no obligation

5 on either party to engage in the conciliation process or to settle. The time limits for lodging claims with the tribunal will be put on hold during the period that the claim is with Acas (the relevant time limit may be extended by up to one month). Employment Tribunal Penalties on employers The Enterprise and Regulatory Reform Act 2013 contained provisions giving tribunals the discretion to impose financial penalties (which would be payable to the exchequer) on employers who are found to have breached employees rights. The penalties levied would be in addition to any compensation the employer is ordered to pay to the complainant. These provisions are expected to come into force in April The Act states that the tribunal would have the discretion to levy a penalty where the breach (of the employee s rights) has one or more aggravating features, for example where the treatment of the employee was deliberate or malicious, where the employer had repeatedly breached the right in question, or where the employer has a dedicated human resources department. It is proposed that the penalty will be half of the total award made by the tribunal with a minimum of 100 and a maximum of 5000, and that a 50% discount will be applied if the employer pays the penalty within 21 days. Mandatory equal pay audits The Government intends to issue regulations requiring employment tribunals to order employers who are found to have breached equal pay law, or discriminated because of sex in non-contractual pay, to carry out an equal pay audit designed to identify action to be taken to avoid equal pay breaches occurring or continuing. An audit would not be ordered in cases where: the employer has already completed an audit which meets prescribed requirements in the past three years it is clear without an audit whether any action is required to avoid equal pay breaches occurring or continuing the breach gives the tribunal no reason to think there may be further breaches the disadvantages of an equal pay audit would outweigh its benefits. The relevant provisions are expected to come into force in October It is likely that the regulations will initially exempt any organisation that is defined as a start-up or microbusiness (i.e. those with fewer than 10 employees). Employment tribunals will have the power to impose a civil penalty of 5000 in the event of non-compliance with an equal pay audit order. National Minimum Wage (NMW) At the time of writing, all the indications are that the government is contemplating a relatively substantial increase in the NMW in October, although this is likely to be dependent on the report of the NMW commission, the state of the economy later in 2014 and (not least) political considerations in the run up to the May 2015 election.

6 3. Other possible changes and developments in 2014 The following is a more speculative summary of other developments which may occur in the coming year, based on case law, government commitments and issues which are prominent in public debate and the media. Legal challenges to tribunal fees In July 2013, fees were introduced for bringing claims to an employment tribunal. Fees are in two parts; an issue fee must be paid when the claim is lodged with the tribunal and, if the claim is set down for a full hearing, there is an additional hearing fee to pay. Fees are at two levels, depending on the type of claim. Two separate legal challenges have been launched asserting that the introduction of fees is in breach of EU law, and a judicial review of the decision to implement fees has been granted in both cases. A judgment in one of the cases is expected imminently. In the meantime applicable fees must be paid but, if either legal challenge is successful, the legislation requiring tribunal claimants to pay fees will be removed. The Government has confirmed that, if this occurs, HM Courts & Tribunals Service will make arrangements for the reimbursement of all fees paid. Concept of establishment for collective consultation purposes Section 188 of The Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A) states that the duty to consult representatives in the event of proposed redundancies arises where the employer proposes to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less. In 2013, the EAT controversially ruled in Usdaw v Ethel Austin Ltd and Woolworths that this provision was more restrictive than the relevant provision in the EU Collective Redundancies Directive, and so the words at one establishment must be deleted in order to disapply that restriction. The case has been appealed by the government to the Court of Appeal, the key issue being whether the EAT has the authority to amend legislation in this way. It was due to be heard in the Court of Appeal on Wednesday 22 January, but the Court made the decision to refer the case to the European Court of Justice for rulings on key questions. In the meantime, the effect of the EAT s judgment is that the duty to consult over collective redundancies arises where the employer proposes, within a 90-day period, to dismiss 20 or more employees in total, irrespective of the number of different establishments or workplaces. If the Court of Appeal overturns the EAT s decision, this would be reversed. New health and work advisory and assessment service The Government has confirmed that it will introduce a new, independent health and work assessment and advisory service in 2014, which will give employers of all sizes help with managing long-term sickness absence. The new service will: provide state-funded occupational health assessments for employees who have been off sick for four weeks or more provide advice to both employers and employees on overcoming the barriers that prevent people from returning to work

7 refer employees who are fit enough to work but unlikely to return to their current employer to Universal Jobmatch (an online job-search service). Holiday entitlements At the end of 2012, it was reported that the Government was proposing to amend the Working Time Regulations 1998 with regard to the inter-relationship between statutory annual leave entitlement and sickness absence. The relevant measures were expected to be implemented in 2013, but the Government has not, as yet, progressed the amending provisions. However, given that the measures are required in order to properly implement EU law, it is likely that they will re-emerge during 2014 in the form of firm proposals. It is expected that the new provisions will: give employees the right to carry forward the first four weeks of untaken statutory annual leave to the next holiday year where incapacity has prevented them from taking their full entitlement give employers the choice to require employees who return to work after sickness absence to take any outstanding holiday leave during the current holiday year (where possible), or alternatively, to require them to defer such holiday leave until the next holiday year, if this is justified by business needs. In the meantime, employers are advised, where an employee has been unable to take his or her full period of statutory annual leave due to sickness, to permit carry-over of at least four weeks to the next holiday year, or (if the employment terminates) to pay the employee in lieu of the relevant holidays. Shared parental leave and pay The much-heralded new arrangements for shared parental leave and pay will be not be implemented in 2014, but from April However, given their complexity, employers will need to start preparing for these changes in the next 12 months. Zero hours contracts In December 2013, the Department of Business Innovation and Skills issued a consultation paper seeking evidence on the problems associated with zero hours contracts, and inviting responses to a number of potential actions the Government could take to address them and promote opportunities both for employers seeking to create jobs and for individuals to get work that suits them. This followed public and Parliamentary concern over whether there is abuse of such employment contracts. In particular, the consultation paper sets out to address concerns around the use of zero hours contracts regarding: Exclusivity noting that, while exclusivity clauses may be justified in certain particular cases, in some circumstances zero hours contracts included an exclusivity clause preventing an individual from working for another employer, even if the current employer is offering no work;

8 Transparency noting that individuals are not always clear on the terms, conditions and consequences of a zero hours contract, and employers do not always fulfil or understand their responsibilities. Individuals also referred to uncertainty over access to personal finance markets and their eligibility for benefits payments when their hours of work frequently changed. The consultation paper states that, after considering the responses, the Government will publish a formal response to the issues identified through this consultation, including information on what further action Government intends to take. The consultation closes on 13 March. In normal circumstances, the time required for this process would mean that legislation is unlikely in 2014, but given the attention that the zero hours issues has attracted, it is possible that the Government may wish to implement something quickly, before campaigning for the 2014 general election begins in earnest. Whistleblowing The Enterprise and Regulatory Reform Act 2013 introduced a number of changes to the whistleblowing regime: 1. Only disclosures made "in the public interest" are now protected this provision is intended to remove the scope for workers to use the whistleblowing legislation to bring claims relating to their own contracts, even where the disclosure had no obvious public interest element to it. 2. The legal requirement for disclosures to be made in "good faith" in order to be protected was removed. However, employment tribunals are able to reduce compensation by up to 25 per cent if a disclosure was not made in good faith. 3. An employer can be found to be vicariously liable for workers who victimise colleagues for blowing the whistle (but employers will have a defence against this if they can show they took all reasonable steps to prevent the victimisation). Workers may also be personally liable for the victimisation. However, a recent report by the independent Whistleblowing Commission set up by Public Concern at work, issued in November 2013, proposed major changes in the overall whistleblowing regime. These include a Statutory Whistleblowing Code of Practice to be taken into account by courts and tribunals when whistleblowing issues arise, a strengthening and clarifying of the legal protection for whistleblowers, and a strengthening anti-gagging provisions in the law, so that it is clearer that whistleblowing rights cannot be overridden by contractual provisions or settlement agreements with individual employees. As with the zero-hours issue, such a report would not normally lead to rapid government action, but the prominence given in the media to the use of so-called gagging orders when staff are dismissed from public bodies(particularly in the NHS) may lead to action in 2014.

9 TUPE and public sector pensions: the Fair Deal Until October 2013, the position on the pensions of all public sector employees who are transferred to the private sector was covered by the 2000 Cabinet Office's Statement of Practice on Staff Transfers in the Public Sector and its accompanying A Fair Deal for Pensions policy. In October, the Government published new guidance for central government on the Fair Deal policy, which implemented reforms to that policy. However, this new guidance does not apply to local government, and the Department of Communities and Local Government indicated that it would be considering with the Local Government Association, and others, on what would be needed to achieve the principles of the new Fair Deal policy in local government. We may, therefore, see new regulations on this during the year. The Immigration Bill This Bill will have implications for employing migrant workers, including amongst other things: Simplifying right-to-work checks, by reducing the list of acceptable documents, eliminating older documentation which is vulnerable to forgery, and placing greater reliance on biometric residence permits for this purpose; Removing the requirement on employers to undertake an annual check, replacing that with a check to coincide with the expiry of permission to remain in the country; Extending the period under which the new employer, following a TUPE transfer, must complete right-to-work checks from 28 to 60 days; Increasing the maximum penalty for employing an illegal migrant worker from 10,000 to 20,000. The Bill is currently under consideration by parliament (and amendments to it are still being proposed), but the final version is likely to enacted during Steve Vale is a Consultant in Human Resources and is a regular contributor to Croner-i HR for Local Government. Croner-i HR for Local Government is an on-line employment law and practice reference source designed specifically for HR Managers and their teams in local government.