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Key Employment Changes

ARTICLE ORIGINALLY PUBLISHED OCTOBER 2013

The Government promised it would reduce the amount of red tape and rules on small businesses. At the end of July 2013 most of the proposed changes came into force so let’s go through what has changed and you can decide if the changes make you feel more confident as an employer or manager. If you are an employee do you feel your position at work has become weaker?

Minimum wage

No major changes here. On the first of October the minimum wage rates were increased by 1%

  • Adult workers over 21, by 12p to £6.31
  • 18-20 year olds by 5p to £5.03
  • 16-17 year olds by 4p to £3.72
  • Apprentices up 3p to £2.68

The increase was minimal but there was an increase and none of the more radical proposals like a regional minimum wage appeared. It was very much the status quo was maintained.

Settlement Agreements

These replaced “compromise agreements” and came into force on 29th July 2013 Employers will be able to have “protected discussions” or engage in “hard talking” with employees. They will no longer have the fear that if a package can’t be agreed for the employee to leave that the employee will use these discussions at a later date at a Tribunal.

We will all have experienced difficult or problem employees and the disciplinary process can be a long and painful process to follow.

The protected conversation would allow employers to discuss an employee “leaving” and a financial package being agreed.

The employee can’t be bullied or threatened into signing an agreement and if an agreement is reached they must have a minimum of 10 days to consider the offer before signing. There is a process which needs to be followed but all in all it’s a change to be welcomed by employers.

Employment Tribunals Fees

These were also introduced at the end of July and most employees wishing to take their case to an Employment Tribunal will now have to pay a fee.

It will remain free for some. For example if the former employee is single and has under £3,000 in cash assets or earned under £13,000 in the previous 12 months. (£13,000 is around the NMW for 40 hours a week) . There is a sliding scale then where the ceiling increases if the person has a partner and children. To say the administrative process for an applicant to gain exemption from charges is complicated is an under statement.

The fee goes to the Government to help to cover for the costs of providing Tribunals. The Employer will repay the fee to the employee if the employee wins the case. The level of the fee will depend on the type of claim as shown below:

  • Level 1 – these consist of unlawful deduction of wages, statutory redundancy pay and payment in lieu of notice. The cost is £160 to make a claim and a further £230 if the case reaches a hearing.
  • Level 2 – these include claims relating to unfair dismissal, discrimination, equal pay and whistle blowing (the costs are £250 to issue a claim and £950 if the case gets to a hearing.

If the employee has been eligible not to have to pay the first part of the fee they have to go through the same long process when part 2 of the fee is due!

If fees are unpaid, the claim will not be allowed to proceed. Clearly the view is that the initial cost of over £1,000 will reduce the number of claims but time will tell! I suspect it is as likely that employees will find the administrative process they have to follow so difficult many will drop out

Early Conciliation

There are yet more proposals to come. It is anticipated by April 2014, before going to lodge a case at Employment Tribunal, almost every individual will have to first go through an “early conciliation “ process with Acas.

Conciliation doesn’t mean Acas will settle every case but they do have a good track record. But it builds in another hoop for the employee to jump through and the new tribunal application form is really quite complicated to follow.

So having gone through conciliation the employee’s application can go forward to a Tribunal but they still have to pay their fee! Once again the suggestion is this process is going to reduce further the cases ending up at Employment Tribunal.

Employee Shareholders

Perhaps most radical proposal was the “Employee Shareholder.”

This was introduced in September 2013 but I suspect will attract minimal interest.

In simple terms an employee or new employee agrees to accept a minimum of £2,000 worth of shares for which they get a different type of contract and lose the following rights:

  • the right to claim unfair dismissal unless it is automatically unfair or linked to discrimination.
  • the right to a redundancy payment.
  • they have to give 16 weeks notice of returning early from maternity leave.
  • it doesn’t seem that this is going to be particularly attractive to many employees.

Time will tell how many employers take advantage of the changes above and if the desired effect of reducing the fear of and the number of tribunal cases. It certainly has made lodging a Tribunal case more difficult and potentially costly for employees.



David Wright Personnel

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