People Law in Brief - January 2012

Welcome to January’s People Law in Brief.

I would like to take this opportunity to wish everyone a belated but Happy New Year!

I will use the first People Law in Brief of the year to look ahead to 2012 and what changes people managers can expect to face in the next 12 months. I am sure that it will not have escaped your attention that the Coalition Government is reviewing Employment Law, so there are sure to be further changes announced, leaked or otherwise revealed during the next year!

Please keep an eye out for future editions of People Law in Brief and attend our T&E Advance training seminars in order to benefit from our comment and analysis on the latest developments.

Focus point

The current number of proposed changes to Employment Law by the Government has left many employers feeling confused. Whilst there are a number of consultation processes ongoing which may lead to changes in the law (see Watch this Space[LINK] below), what can be said for certain is that on 6 April 2012, the qualifying period for unfair dismissal will increase from one year to two years.  Whilst this has not been formally announced, the UK Department for Business, Innovation and Skills has recently confirmed that, subject to parliamentary approval, this will apply to employees who are commencing employment after this date, whereas those who are already in employment before that date will retain the current one year qualifying period.

From 1 October 2012, there will also be a big shake up in relation to employers’ pension obligations.  Employers will start being required to automatically enrol eligible "jobholders" in a pension scheme, and both employers and employees will have to contribute to the scheme. The minimum contribution to the scheme will be set at 3% for employers and 5% for employees, however, these contributions will be gradually introduced over a five year period. 

You’ll be able to use your own existing occupational or personal pension schemes if it meets the statutory quality requirements. Otherwise, employers will have to enrol jobholders in the National Employment Savings Trust (“NEST”), a central scheme to be set up by the Government.

There will be a four year staging process during which employers will be required to auto-enrol their employees, starting from 1 October 2012. 

The date on which employers are required to comply with auto-enrolment is based on the number of people on your PAYE system and the PAYE scheme reference number. Employers with more than 120,000 employees will be the first to have to comply, and they will have to do so by 1 October 2012.  Employers with less than 50 employees will not be required to auto-enrol their employees until around 1 May 2015.

It is best for employers to start thinking about this upcoming requirement and having an idea of when their staging date will be and whether their existing occupational pension scheme meets the new statutory quality requirements.  However, the Pensions Regulator will write to all employers 12 months before their staging date with all the details.

In addition to the Government’s changes to pensions, the usual increase to the limit on Tribunal awards will take effect from 1 February 2012.  The following increases will apply:

the cap on a week’s pay in relation to the basic award or statutory redundancy payment will increase from £400 to £430;

the maximum compensatory award for unfair dismissal will increase from £68,400 to £72,300; and

the daily guarantee pay rate will increase from £22.20 a day to £23.50 for employees who are laid off.

Briefcase news
 
Coulson v Newsgroup Newspapers Limited [2011] EWHC 3482

More frequently, Compromise Agreements are being drafted for senior staff to include a clause which states that the employee who is being compromised out of the business should still make themselves available for "any administrative, regulatory, judicial or quasi-judicial proceedings" after the termination of their employment.  Clauses of this kind also often include confirmation from the employer that they will foot the bill for any expenses incurred by the employee in doing this.  This is typically to cover a situation where the employer needs to defend a legal claim and needs the departing employee to cooperate, give a witness statement or appear at a hearing. 

In this particularly high profile case, Andy Coulson, former editor of the News of the World, was seeking a declaration from the High Court that his former employer was obliged to pay the costs and expenses he incurred in defending the criminal allegations against him when he was arrested in connection with conspiracy to unlawfully intercept communications and making unlawful payments to police officers, acts which it was alleged were performed during the course of his employment. 

It was held that clauses of this type are not intended to cover criminal proceedings against employees in person, even if the alleged wrong doing was allegedly carried out during the employee’s employment.  Employees are under a duty to act lawfully during the course of their employment and therefore the clauses do not cover the payment of legal expenses for personal criminal liability, a decision that will be welcomed by employers. 

Watch this space

In April 2011, the government announced its “Red Tape Challenge”, which means a comprehensive review of around 21,000 primary pieces of legislation and statutory instruments, with the view to either abolishing or reforming unnecessary legislation.  The taxpayer currently meets the entire cost of Tribunal litigation, which the Government is proposing to change.  Under the first Government proposal, there would be a fee charged to bring a claim, followed by a hearing fee payable 4-6 weeks before the hearing, and interim payments depending on whether additional hearings or applications are required.  There will also be incremental fee levels depending on the nature of the claim, and it is thought that a discrimination claim may attract a higher fee. 

Under the second proposal, there would be only one fee payable when the Claimant brings their claim.  The fees again would be incremental depending on the claim's value, and it is thought that a Claimant will be required to declare on their Claim Form whether they believe their claim to have a value greater than £30,000, which means that a higher fee may be charged.  The Government's view is that a discrimination claim brought would be £600 for a claim under £30,000, and £1,750 for a claim over this amount. 

A combination of the options has also been proposed.  This would mean that the fee would initially be paid by the Claimant, however the Tribunal would be given the power to order the Respondent to pay the issue fee if the Claimant is successful.  The Government has also proposed additional fees for making types of applications, e.g. a request for written reasons after an oral Judgment has been given.  The fee would be paid by whichever party made the application.  The Government has initially indicated that fees would not be refundable by the Tribunal other than in exceptional circumstances, which means that the hearing fee may remain payable even if the claim settles before the hearing.  If a Claimant brings a vexatious or misconceived claim, the Tribunal is likely to have the power to order an additional deposit of £1,000 to be paid (the current deposit is up to £500).

The Government has indicated that there will be some allowance made for those on low incomes, who cannot afford the fee, for example those on certain welfare benefits, or who have a low disposable income.  This will arguably cover a wide range of Claimants, who are likely to be out of work when bringing an Employment Tribunal claim. 

It is more likely that the first option is going to be imposed, as new legislation would be required to implement the second option, and therefore the introduction of the new fee structure may end up being delayed until at least 2014. 

As part of the Red Tape Challenge, on 31 January 2012, the Government’s “call for evidence” on the effectiveness of TUPE and the scope of collective redundancy consultations will conclude. It is expected that a formal consultation will commence later in the year. 

It is anticipated that there will also be Government consultation on reforms to Compromise Agreements, ACAS conciliation and the introduction of "protected conversations" to the workplace. 

Protected conversations, according to David Cameron, would enable an employer and an employee to feel able to sit down together and have a frank conversation at either parties’ request without the conversation being used as the basis for a Tribunal claim.  The Government have confirmed that, if introduced, such conversations would not be a cover for discrimination.  However, one person’s “frank conversation” is another person’s “bullying and harassment”, so it will be interesting to see how the Government will manage this in practice.  We fear that there will be an increase in the amount of litigation at Pre Hearing Reviews about what was, or was not, a protected conversation and is therefore admissible in evidence. 

And finally

There are still places available on our upcoming T&E Advance training session in February.

"Employment Law in a Nutshell", which is a full day's course on 28 February 2012, is aimed at line managers or those who are new to HR and it will cover all of the basics of Employment Law, in an easy to digest format.

For further details or to book, please contact Jenny Arrowsmith BOOK NOW.