Business secretary Vince Cable introduced The Enterprise and Regulatory Reform bill to Parliament on 23 May 2012, with its second reading held on 11 June 2012. The bill is of particular interest to SBMs as it includes new employment law provisions, and could have financial implications for the school if they are not adhered to. I will be discussing various aspects of this bill in this article, including financial penalties for employers who lose employment tribunal cases. There are also other amendments to existing legislation proposed within the bill, which will now be scrutinised line by line by the Public Bill Committee as they prepare to report to the House of Commons in July.

The bill includes new employment law provisions, and could have financial implications for the school if they are not adhered to

ACAS

The bill includes an amendment (18A) of a requirement for a prospective claimant to contact ACAS before instituting proceedings. In brief this amendment requires ACAS to contact a conciliation officer who shall, during a prescribed period, endeavour to promote a settlement that is agreeable to both parties to the proceedings. If a settlement cannot be agreed, or the time period, to be set out in regulations, expires without an agreement being reached, the conciliation officer will issue a certificate stating those reasons. In certain cases the conciliation officer can seek to promote the reinstatement of the prospective claimant by the employer, or where the claimant does not wish to be reinstated arrange for an agreement of compensation between the two parties.

It all sounds so simple, but as we all know this is not the case and I suspect that the lawyers will be the only ones who will be raking in the cash!  I do hope though that this isn’t the case and that this amendment will ease the upset and distress that employee tribunal proceedings can cause.

Whistleblowing

The bill though appears to have caused quite a lot of consternation amongst employment law specialists with regard to one particular amendment, Part IVA of the Employment Rights Act 1996 (the whistleblowing provision), which they feel has been brought in ‘by the back door’. Apparently, the Department for Business, Innovation and Skills wants to introduce a public interest test in order to close a legal loophole that allows employees to blow the whistle on breaches of their own personal employment.

I can see their point of view and why they want to close the loophole, but will there still be enough protection for whistleblowers? Why though do they want to bring this amendment in without any consultation from the general public? The Public Concern at Work briefing makes a good point in that the timing of the amendment does not seem prudent given the ongoing Leveson inquiry, which will have important outcomes for the public interest and will likely have conclusions that will deal with whistleblowing. Why didn’t they wait until this inquiry had been concluded and judgements made before putting the amendments to Parliament? 

The Department for Business, Innovation and Skills wants to introduce a public interest test in order to close a legal loophole that allows employees to blow the whistle on breaches of their own personal employment

A barrier to whistleblowers?

The original purpose of the Public Interest Disclosure Act was to encourage workers to raise concerns about malpractice in the workplace, with protection from dismissal and victimisation. However, I feel that the public interest test will focus more on what the concern is or what may have happened and may in fact become a barrier to individual whistleblowers, who may even make the decision not to speak up at all. 

For those of you who regularly read my articles you will be aware of the SBM who whistleblew at their school; it was such a brave decision to make and I for one am immensely proud of what this SBM did, but would they have done this if they had to prove that they believed that their disclosure was made in the public interest and that this was reasonable in the circumstances? Would they have questioned as to whether they were actually protected from bullying or intimidation? I think this new amendment may in fact cause people to think twice before whistleblowing and choose the safe option of keeping quiet.

Compensation awards

Another proposed amendment is the introduction of a power for the Secretary of State to amend section 124 of the Employment Rights Act 1996 to change the maximum compensatory award for unfair dismissal, currently capped at £72,300. The bill states at section 12 (2) that the limit may be varied to (a) a specified amount, or (b) a specified number multiplied by a week’s pay of the individual concerned, or it may be the lower of those two! The bill then defines that the amount specified by virtue of subsection (2)(a) may not be less than median annual earnings or more than three times median annual earnings.

In laymen’s terms, I think that what they are saying is the Secretary of State may introduce a set amount, a certain number of weeks’ pay, or the lower of the two. The median annual earnings is currently set at £26,000, so I would assume that the set amount could not be lower than this. It may be the case that the Secretary of State also considers the plight of small businesses and sets lower limits or amounts to support them. This change could significantly limit the amount an employee could recover from an unfair dismissal claim.

The change to the maximum compensatory award for unfair dismissal, currently capped at £72,300, could significantly limit the amount an employee could recover from an unfair dismissal claim

Financial penalties

Section 12 of the Employment Tribunals Act 1996 is now to be amended to enable tribunals to be given discretionary powers to impose financial penalties on employers where the tribunal concludes that the employer has breached any of the worker’s rights, and the tribunal considers that the employer has deliberately acted with ‘aggravating features’ to which a claim relates. The amount of a penalty under this section shall be at least £100, and no more than £5,000.

If an employment tribunal makes a financial award against an employer on a claim, and also orders the employer to pay a penalty as described above, the amount of that penalty shall be 50% of the award. However, an employer’s liability to pay a penalty under this section is discharged if 50% of the amount of the penalty is paid no later than 21 days after the day on which notice of the decision to impose the penalty is sent to the employer. I understand that the employer will also have to pay out for the claimant’s fees in regard to the tribunal. I think the basis of any claim in these financial penalties will be the ‘aggravated features’.

Compromise agreements

Compromise agreements are to be renamed ‘settlement’ agreements when they are in connection with employment legislation such as the Employment Rights Act. This change is for no other reason than that the government believes the word ‘settlement’ reflects the purpose and intent of such agreement.  This also applies to section 144, subsection (4)(b) of the Equalities Act 2010, where a compromise contract has been changed to a settlement agreement.