LEGISLATION TIMETABLE 2014

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1 LEGISLATION TIMETABLE 2014 TOPIC SUMMARY TIMETABLE January 2014 Cap on bankers bonuses ACAS Code on Disciplinary and Grievance Procedures For certain code / identified staff, financial institutions must impose a cap on variable pay (bonuses) of 100% of salary, with the possibility of increasing the cap to 200% of salary with shareholder approval. The cap will apply to remuneration for performance during The UK government has launched a legal challenge to the cap. However, due to the UK s obligations under European law, the cap was still implemented on 1 January The European Banking Authority (EBA) is responsible for implementing the cap. In May 2013, the EBA proposed that anyone earning over 500,000 would be automatically affected. However, it has recently revised this proposal, eliminating the automatic trigger based on salary and incorporating a new system of scrutiny for high earners who want to be excluded. It has advised that institutions will have to demonstrate that the excluded staff, on the basis of the business unit they work in and their duties and activities, have no material impact on the institution s risk profile. Institutions will have to inform the PRA about staff earning 500,000 to 750,000 and who are being excluded from the cap. The PRA can challenge these exclusions. Between 750,000 and 1million, institutions will need to seek prior PRA approval to exempt staff from the bonus cap. The EBA must be consulted about exemption of those earning more than 1,000,000. It has been reported that this change could allow an estimated 12,000 bankers to avoid the cap. Brodies Partner and Head of Employee Benefits, Nigel Watson, has been working closely with some of the UK s major financial institutions helping them to respond to developments and manage the so-called bankers bonus cap. For example, a popular approach being explored at the moment is the introduction of role-based monthly allowances essentially a new class of fixed pay. Without doubt we are seeing the compensation model in the financial services sector being redrawn. We are seeing a move away from a compensation mix that was heavily focused on variable discretionary pay funded by reference to revenues, to one of higher fixed pay linked to contribution and competencies. Throw in a tighter governance framework around performance adjustment and clawback and 2014 is going to be an extremely demanding year for everyone involved in this area. ACAS has launched a consultation on amendments to the sections of its Code of Practice on Disciplinary and Grievance Procedures that deal with the right to be accompanied at discipline and grievance hearings, and specifically what constitutes a reasonable request. 1 January 2014 Consultation closes on 7 January Brodies LLP is a limited liability partnership, registered in Scotland. Registered no. SO Registered office: 15 Atholl Crescent, Edinburgh, EH3 8HA. A list of all members available for inspection at 15 Atholl Crescent Edinburgh EH3 8HA. Brodies is a registered trade mark.

2 2 TUPE Draft TUPE Regulations were published on 31 October Some of the key changes are as follows: 31 January 2014 Amendment to service provision changes : the draft regulations arguably narrow the scope of such transfers by providing that a service provision change will only take place where the post-transfer activities are fundamentally the same as the activities carried out previously. Amendment to the restrictions on varying contracts: any purported variation to a transferring employee s contract will be void if the reason for it is the transfer (transfer-related reasons have been removed). However, contractual variation will be permitted if the reason for the variation is an economic, technical or organisational reason entailing changes in the workforce; or if the reason for the variation is the transfer, but variation is permitted by the terms of the contract. Changes in the workforce will include a change of location. The restriction on varying contracts will not apply to terms incorporated from a collective agreement provided that the variation takes effect more than one year after the date of transfer; and following the variation, the terms are no less favourable to the employee when considered together than those which applied immediately before the variation. Amendment to protection against dismissal: if the reason for a dismissal is the transfer, the dismissal will be automatically unfair (dismissals for a transfer-connected reason will no longer be automatically unfair). However, a dismissal will not be automatically unfair where there is an economic, technical or organisational reason entailing changes in the workforce. Changes in the workforce will include a change of location. The time limit for providing employee liability information to the transferee is increased from 14 to 28 days. Where a contract incorporates provisions of collective agreements agreed from time to time, collective terms agreed after the date of transfer without the transferee s involvement will not automatically transfer. Pre-transfer collective consultation by the transferee will be permitted for the purposes of complying with the collective redundancy rules (provided that the transferor and transferee can agree and where the transferee has carried out meaningful consultation). Employers with fewer than 10 employees may consult directly with affected employees in cases where there are no existing appropriate representatives. Zero-hours contracts January - March 2014 The government has launched a consultation on zero-hours contracts, seeking evidence on the problems identified around the use of zero-hours contracts. It invites responses to a number of actions to address these problems. The government has indicated that, at this stage, it has no preferred options, and views are being sought on maintaining a fair balance between the flexibility provided by zero-hours contracts and ensuring adequate protection for individuals. To address exclusivity clauses (which prevent workers working for more than one employer), the government is seeking views on the following options: Consultation closes on 13 March banning exclusivity clauses in contracts that offer no guarantee of work issuing guidance on the fair use of exclusivity clauses encouraging the production of an employer-led Code of Practice on the fair use of exclusivity clauses; or relying on existing common law redress, which enables individuals to

3 3 challenge exclusivity clauses that go beyond what is adequate to protect an employer s legitimate business interests. To improve transparency over zero-hours contracts, the government is seeking views on: improving the content and accessibility of information, advice and guidance on zero hours contracts encouraging a broader, employer-led Code of Practice to cover the fair use of zero hours contracts generally; and whether and how the government could produce model clauses for zero hours contracts. Right to request flexible working ACAS conciliation The right to request flexible working is to be extended to all employees with 26 weeks service, rather than just those employees who currently qualify as parents or carers. The current statutory request procedure is to be replaced with a duty to deal with requests in a reasonable manner and to notify employees of a decision within 3 months, unless an extension is agreed. ACAS has produced a draft statutory code of practice setting out what a reasonable process requires. Tribunals will be required to take the code into account when considering complaints. ACAS also intends to publish nonstatutory guidance with practical examples of managing requests in the workplace. This should include guidance on handling conflicting requests from different employees, and the interaction between flexible working rights and discrimination legislation. Employees will still be limited to one request in any 12-month period. Under a new compulsory procedure, aimed at reducing the number of tribunal claims, claimants will have to submit details of their dispute to ACAS before bringing a tribunal claim. ACAS will then offer early conciliation (EC) for up to one month (which can be extended by a further two weeks in some circumstances) to try and resolve the dispute. This service will be free for both employers and employees. If the parties reach a settlement, this can be recorded in a COT3 or settlement agreement. If, however: ACAS is unable to contact the claimant or respondent The claimant or respondent tells ACAS that they are unwilling to conciliate The parties agree to conciliate but either party then withdraws from the process At any point during the EC period, a conciliation officer considers that there is no reasonable prospect of achieving settlement The EC period expires without settlement having been reached ACAS will issue an EC certificate. The claimant can then submit a tribunal claim. When the claimant contacts ACAS this will pause the time limit for the claimant to present their claim to a tribunal. The time limit will start to run again when the claimant receives an EC certificate. The normal time limit will be amended (to expire one month after receipt of the EC certificate) if it was due to expire in the period between the claimant contacting ACAS and one month after they receive the EC certificate.

4 4 Once a tribunal claim has been made, ACAS conciliation may still be available if the claimant and respondent both request it; or the conciliation officer considers there is a reasonable prospect of negotiating settlement. Tribunal penalties Discrimination Questionnaires Tribunals will be given a discretionary power to impose financial penalties on employers who have lost a tribunal claim where their breach had 'one or more aggravating features' e.g. negligence / malice. The penalty (payable to the Exchequer) would be 50% of the compensation awarded by the tribunal, subject to a minimum of 100 and a maximum of If the employer pays the penalty within 21 days, it will be reduced by 50%. Tribunals will have to take account of an employer's ability to pay. Discrimination questionnaires are to be abolished. The government will instead promote an informal approach to the disclosure of information via new ACAS guidance. Managing longterm sickness absence Other 2014 A new health and work assessment and advisory service will be established to assist in managing long-term sickness absence. It will offer a state-funded assessment by occupational health professionals for employees off sick for 4 weeks or more; and case management for employees with complex needs to facilitate their return to work Expected Spring 2014 Caste discrimination Equal pay audits The government has indicated that it will issue a consultation on prospective legislation on caste discrimination. The government has stated that it intends to introduce regulations giving tribunals power to order an employer to carry out an equal pay audit where it is found guilty of gender discrimination in relation to contractual or noncontractual pay matters. Consultation expected to commence February or March 2014, with draft order expected autumn Expected October Shared parental leave The government intends to introduce a new system of shared parental leave. Shared leave Expected in weeks of maternity leave will remain the default position for all employed women. However, a woman with a working partner (where they both meet qualifying conditions) will be able to end her maternity leave at any time after the compulsory 2-week maternity leave period, and she and her partner will be able to take shared parental leave and pay. The couple can take leave consecutively, or concurrently, as long as the total does not exceed what is available to them. The cut-off point for taking shared parental leave will be 52 weeks following birth (or adoption). The regulations will provide that leave can be taken in a single period or in non-consecutive periods. However, the regulations may empower employers to require that the employee takes leave in a single period. Notice

5 5 Both parents will need to give their respective employers 8 weeks notice to begin shared parental leave. If they want to take several blocks of leave, they must give 8 weeks notice in respect of each period. Employees will need to provide a non-binding indication of their expected pattern of leave when they notify their employer of their intention to take shared parental leave. Pay Eligible employees will continue to be entitled to a maximum 39 weeks statutory pay. 37 weeks statutory pay (i.e. anything after the compulsory 2-week maternity leave period) can be shared. Statutory shared parental pay will be paid at the same rate as statutry maternity pay. Paternity leave Ordinary paternity leave will still be available. Additional paternity leave and additional statutory paternity pay will be abolished. Adoption and surrogacy Eligible adopters will be able to benefit from the new system. Adoption leave and pay will be extended to eligible parents in a surrogacy situation. Adoption pay will be brought into line with statutory maternity pay. The 26-week qualifying condition for adoption leave will be removed. KIT days Each parent taking shared parental leave will be allowed 20 KITstyle days, in addition to the mother s 10 KIT day entitlement during maternity leave. Right to return The right to return to the same job will be maintained for employees returning from any period of leave that includes maternity, paternity, adoption and shared parental leave that totals 26 weeks or less (even if the leave is taken in discontinuous blocks). Any subsequent leave will attract the right to return to the same job, or if that is not reasonably practicable, a similar job. EXPECTED Agency Workers Fathers right to attend ante-natal appointments. Adopters right to attend pre-adoption meetings. In March 2013, the government confirmed that it intended to review the Agency Workers Regulations. No update has been issued on this. Fathers are to be given a new right to unpaid time off work to attend up to two ante-natal appointments (up to a maximum of six and a half hours for each appointment). Adopters may also take time off to attend appointments to meet the child they intend to adopt. Annual leave and The government consulted in 2011 on amending the Working Time

6 6 sickness absence Regulations 1998 to reflect European case law permitting unused leave to be carried forward to the next leave year if it has not been used due to sickness absence / family leave. The government also proposed allowing employers to buy out 1.6 weeks annual leave or require employees to carry it forward if there is a genuine business need. The government has not published its response to the annual leave proposals. Tribunal power to make recommendations Rapid resolution scheme Apprenticeships Minimum Wage The government plans to remove the power of employment tribunals to make wider recommendations in successful discrimination claims. The government has stated its intention to consult further on a rapid resolution scheme to provide swifter and cheaper determination of low-value straightforward tribunal claims, such as holiday pay. The government proposes to simplify the regulation of apprenticeships in England by introducing the concept of an approved English apprenticeship. The government intends to simplify the National Minimum Wage regulations. In the meantime, it has published guidance to help employers comply with National Minimum Wage legislation. The guidance provides advice and examples to explain: what does and does not count as pay and working hours for minimum wage purposes eligibility for the minimum wage how to calculate the minimum wage how the government will enforce the minimum wage. Recruitment sector SSP record keeping obligations Whistleblowing The government has consulted on reforming the legislation which regulates employment agencies and employment businesses, with the intention of introducing a simpler framework. A further short consultation on draft legislation, including a new definition of employment agency, is due to take place. The government intends to abolish the SSP record-keeping obligations and allow employers to keep records in a flexible manner. No anticipated date of introduction has yet been given. In July 2013, the government published a call for evidence on whistleblower protection, which ran until 1 November It sought views as to whether changes are required to ensure whistleblowers are adequately protected and that workers are not discouraged from coming forward about wrongdoing. The response to the government s call for evidence has not yet been published.