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Colin Witcher discusses some of the key provisions of the Enterprise and Regulatory Reform Act 2013

June 24, 2013

Introduction

The ERRA is an important piece of legislation, covering maters such as unfair dismissal, health and safety and copyright. The EERA, the Government's policy paper and commencement timetable can be found here: https://www.gov.uk/government/publications/enterprise-and-regulatory-reform-act-2013-a-guide. By way of a very brief overview, the Act is intended to:

  • Improve the employment tribunal system
  • Strengthen and streamline the UK's competition regime and create a new Competition and Markets Authority
  • Implement measures from the Red Tape Challenge including changes so that in future civil claims for breach of health and safety duties can only be brought where it can be proved an employer has been negligent
  • Give shareholders of UK quoted companies binding votes on directors' pay
  • Modernise the UK's copyright framework
  • Simplify regulation

25 June 2013 update

In terms of employment law, from tomorrow, the following changes should be noted by employers and employees, and staff-handbooks / procedures amended accordingly:

  • "Political Opinions or Affiliation": The two year qualifying period for unfair dismissal will no longer apply where the main reason for dismissal is the employee's political opinions or affiliation. This means that no qualifying period of continuous employment will be required in order to bring a claim. This provision reflects a ruling by the European Court of Human Rights that the current employment legislation did not give sufficient protection to the right of freedom of assembly and association: Readfearn v The United Kingdom (Application no. 47335/06). However, many considered the ECHR’s approach to be flawed, as there was a compelling argument that political opinion was protected as a philosophical belief under the Equality Act 2010 and as such a dismissal on that ground would have been unlawful and any employee concerned was protected by domestic legislation. The merits of that debate are now largely academic, as the ERRA 2013, offers greater protection.
  • Compensatory Award: The Government will have the power to limit the amount of the compensatory award in unfair dismissal cases. This will mean that in most unfair dismissal cases the maximum compensatory award will be the lower of twelve months pay and the existing statutory cap; currently £74,200. It is envisaged that the power to provide for a revised cap whilst comes into effect tomorrow will not be utilised until July 2013, and it shall only apply where the effective date of termination is on or after the date the revision comes into effect.

The cap on compensation for unfair dismissal has increased from £12,000 to £74,200 since 1999. The power to amend the current cap is intended to provide the Government with flexibility to make changes to address, for example, business concerns and the economic climate. However, the power cannot be used to reduce the cap below the annual average earnings or to increase it above three times the annual average earnings.

  • Whistle Blowing: For an employee relying on the protections available to whistle blowers, his or her disclosure now has to be in the public interest. There is further no requirement for the employee to demonstrate that the disclosure was made in good faith. The demand for "public interest" is designed to prevent employees from claiming that a complaint or grievance about an alleged breach of their own employment contract constitutes the basis for a whistleblowing claim. The Government recently described this amendment as fixing the loophole in the existing whistleblowing protections in the Employment Rights Act 1996 which allowed for personal grievances.

However, whilst the "good faith" test is removed as a hurdle to succeeding in a claim, it is important to note that Employment Tribunals will be given the power to reduce compensation by up to 25% where a disclosure is not made in good faith. Accordingly, it should still be pleaded that the disclosure is in good faith if the same can be demonstrated.

Further, with respect to whistleblowing claims the meaning of "worker" is to be extended and personal liability for co-workers who victimise whistleblowers and vicarious liability for their employers will be introduced. However, the employer would only be liable for a detriment where it is done by a worker in the course of employment or by an agent of the employer with the employer’s authority. Employers who take all reasonable steps to protect workers from the actions of their co-workers will be able to rely on this as a defence and may not be liable. However, the co-workers may still be personably liable.

  • Judges: The automatic requirement for Judges to sit with lay members to hear and determine cases that reach the Employment Appeal Tribunal is removed. Judges will have the discretion to direct a full panel with lay members if they consider it necessary, based on the facts of a case.

Fees

It is understood that fees will be introduced in the Employment Tribunal system from 29 July 2013 in relation to both claims and appeals. The Employment Tribunal and Employment Appeal Tribunal Fee Order 2013 which sets out the fees payable and similar is available here: http://www.legislation.gov.uk/ukdsi/2013/9780111538654

It should be noted that claimants will qualify for a full remission of the Employment Tribunal fee if they are in receipt of the "qualifying benefits", namely:

  • Income Support;
  • Income-based Job Seekers Allowance;
  • Income-related Employment and Support Allowance;
  • Working tax credit, provided that no child tax credit is being paid to the party; and
  • Guarantee credit under the State Pension Credit Act 2002

If a claimant is not in receipt of benefit then whether they qualify for a remission will depend upon an assessment of his or her personal circumstances.