UK employment lawyers and HR professionals need to be on the alert this year to keep up with the numerous consultations and proposals which have been or are expected to be initiated by the Government. The key developments this year will be the increase in April in the qualifying period for unfair dismissal rights from one to two years and, in October, the introduction of the new pensions auto-enrolment rules but more is in the pipeline. 

April 2012 changes

  • Qualifying period for unfair dismissal to increase from one to two years – we are still awaiting information on transitional provisions to find out if employees who have already accrued between one to two years’ service on 6 April 2012 (and are therefore qualified under the current law) will lose their unfair dismissal rights.
  • Employment Tribunal procedure – significant changes to be introduced, including increase in deposit orders from £500 to £1,000; increase in maximum costs award from £10,000 to £20,000; witness statements will no longer be read aloud unless the Employment Judge directs otherwise; withdrawal of State funded expenses for witness attendance at Tribunal and power for Tribunals to order losing party to pay winning party’s witness costs; Employment Judges to be able to hear unfair dismissal cases alone.
  • Increase in rates – Statutory maternity, paternity and adoption pay to increase from £128.73 to £135.45 per week from April 2012. Standard rate of statutory sick pay to increase from £81.60 to £85.85 per week from April 2012.

October 2012 changes

  • Pensions auto-enrolment – a new duty on all employers in Great Britain to enrol eligible job holders into a pension scheme, currently set to be implemented over four years from 1 October 2012 (large employers to be affected first). There will be mandatory employer contributions payable into a qualifying workplace pension scheme or National Employment Savings Trust (NEST).
  • National Minimum Wage – likely to increase on 1 October, usually in line with the Low Pay Commission’s recommendations delivered to the Government in February.

Changes expected but no implementation date as yet

  • Financial penalties for employers who lose at Tribunal – Employment Judges will soon be given discretion to levy a financial penalty, payable to the State, against such employers for breach of employment rights. It is proposed that the penalty should be half of the total award made by the Employment Tribunal to the winning claimant, subject to a minimum of £100 and a maximum of £5,000. There will be a reduction of 50% if the penalty is paid within 21 days (rather like a parking fine).
  • Early ACAS conciliation – all Employment Tribunal claims are, in future, expected to be lodged with ACAS first, with the parties being offered pre-claim conciliation for a period of one month before going to Tribunal. Conciliation will not be compulsory, and it will “stop the clock” running on the time limit for presenting a claim to the Tribunal. The new system is unlikely to be introduced before April 2014.
  • Mediation – the Government is proposing to work with the private sector to share knowledge of mediation with smaller businesses in order to increase the use of mediation to resolve disputes.
  • The formulae for uprating Tribunal awards and redundancy payments will be modified so that annual increases in those awards will be rounded up to the nearest £1, rather than the nearest £10 as at present. This should mean rates will rise less rapidly in the future.
  • Whistleblowing reform – employees will soon no longer be able to make a protected disclosure about breach of their own employment contract.

What’s under review?

  • Introduction of Employment Tribunal fees – having decided to introduce fees to bring a claim in the Employment Tribunal, the Government is currently consulting on two different options as to how to structure those fees. It is unlikely that either option would be introduced before 2013. The consultation closes on 6 March 2012.
  • TUPE and collective redundancy consultation – the Government is currently collecting views on its proposals to simplify TUPE (including whether to do away with the service provision change provisions added in 2006), and collective consultation laws (including whether to reduce the minimum consultation period for proposed collective redundancies involving 100 or more employees, from 90 days to 60, 45 or 30 days). The two relevant “Calls for evidence” close on 31 January 2012.
  • Flexible parental leave, flexible working, annual leave and equal pay – the Government’s response to its proposals contained in its Consultation on Modern Workplaces is expected “early 2012”. The key proposals on which an announcement is expected are:
    • Flexible parental leave comprising an 18 week period of maternity leave for mothers, followed by a new 34 week period of shared parental leave.
    • Extension of the right to request flexible working to all employees who have completed at least 26 weeks’ continuous employment.
    • Changes to the Working Time Regulations 1998 to clarify the position on carry forward of statutory holidays into the next holiday year. It is also proposed to relax the rules relating to the additional 1.6 weeks’ annual leave entitlement under Regulation 13A by allowing employers to “buy out” the entitlement from their employees and for employers to be able to require employees to carry over this entitlement in cases of “genuine overriding business need”.
    • New Employment Tribunal powers to require employers to conduct and publish a pay audit when in breach of the Equality Act 2010.

Key proposals soon to be reviewed

  • Simplifying dismissal processes – the Government will be consulting soon on whether to introduce “compensated no fault dismissals” in the case of “micro firms” with fewer than 10 employees and how to simplify the existing dismissal process (potentially involving changing the ACAS Code, or providing supplementary guidance for small businesses). 
  • “Protected conversations” – the Government is expected to consult shortly on whether employees should be allowed to have “protected conversations” with staff (which would be incapable of being used in evidence in a future Tribunal claim) without there needing to be a formal dispute in existence or in prospect.
  • Compromise agreements – a consultation is expected on the simplification of compromise agreements. This includes a proposal to dispense with long lists of causes of action, introducing a standard text, amending section 146 Equality Act 2010 to provide reassurance that compromise agreements can safely be used to compromise discrimination claims, and renaming such agreements as “settlement agreements”.
  • Rapid resolution schemea consultation is expected on developing a scheme which will offer a quicker and cheaper alternative to determine straightforward, low value claims at an Employment Tribunal.
  • Third party harassment – a consultation is expected on whether to remove the requirement for employers to take reasonable steps to prevent harassment of their employees by third parties (section 40 Equality Act 2010).
  • Review of Employment Tribunal Rules – apart from the changes expected in April 2012, other proposals which were considered in the Resolving Workplace Dispute Consultation (response published 23 December 2011) are now being reviewed by Mr Justice Underhill whose remit is to report back to the Government by April 2012 with his proposals.

Bank and public holidays in 2012

There will be an additional bank holiday in 2012 to mark the Queen’s Diamond Jubilee on 5 June. This will bring the total number of bank and public holidays in England and Wales in 2012 to 9.

Key cases to look out for in 2012

  • Default Retirement Age and age discrimination (Seldon v Clarkson Wright & Jakes being heard with Homer v Chief Constable of West Yorkshire Police). Due to be heard in the Supreme Court this month, Seldon will consider whether a rule requiring partners in a firm of solicitors to retire at 65 was justified on the grounds that it was a proportionate mean of achieving the legitimate aim of workforce planning and providing associates with promotion opportunities. It is hoped that these cases will give some guidance to employers on the circumstances in which an employer justified retirement age may be lawful.
  • Can age discrimination be justified by cost alone? (Woodcock v Cumbria Primary Care Trust). The decision of the Court of Appeal is now awaited in this important case which considers whether age discrimination can be justified purely on the basis of the unreasonable cost to the employer of rectifying the discrimination against the employee. The case considers whether an employer could justify dismissing an employee early to avoid the cost of paying him an enhanced pension.
  • Collective redundancies (USA v Nolan). This case considers when the obligation to consult arises in circumstances where an employer proposes to close a workplace. The Court of Appeal has referred this question to the European Court.
  • Associative discrimination on the grounds of pregnancy (Kulikaoskas v Macduff Shellfish and another). The Scottish Court of Session has considered whether under the Sex Discrimination Act 1975 a man is entitled to bring a discrimination claim because of his association with his pregnant partner. It is unclear whether the Equality Act 2010 prohibits associative pregnancy discrimination but this will only be decided by future case law. If the Court of Session considers that EU law requires protection against such discrimination, future Tribunals will be obliged to interpret the Equality Act 2010 as covering it.
  • Caste discrimination (Begraj and another v Heer Manak Solicitors). An Employment Tribunal will soon be deciding its first UK caste discrimination claim which has been brought by a husband and wife of the Hindu faith.
  • Equal Pay (Dumfries and Galloway Council v North and others). In this case the Supreme Court will consider whether female school workers and male manual workers, employed by the same employer at different establishments, were “in the same employment” for the purposes of the Equal Pay Act 1970.