Key employment law reforms take effect

A series of key employment law reforms were adopted or brought into force in the UK in spring 2013. The main changes relate to periods of parental leave, which will increase; redundancy consultation periods, which will decrease for large-scale redundancies; maternity, paternity and adoption pay, which will increase; and the introduction of several changes to employment tribunal procedures. A new type of employment contract, that of ‘employee shareholder’ has also been created.

Changes in UK employment law

In spring 2013, a series of key unemployment law reforms introduced in the United Kingdom changed parental leave and pay, redundancy consultation periods and employment tribunal regulations. A new type of employment contract has also been created.

Parental leave

The Parental Leave (EU Directive) Regulations 2013 made changes on 8 March 2013 to UK legislation to implement the revised EU Parental Leave Directive (2010/18/EU) (743Kb PDF). The changes include an increase from three to four months in the period of parental leave permitted following the birth or adoption of a child. The right to request flexible working was extended to agency workers returning from a period of parental leave.

Redundancy consultation

The Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment) Order 2013 came into effect on 6 April 2013. Among other things, it reduced the statutory minimum redundancy consultation period from 90 days to 45 days for large-scale redundancies affecting more than 100 employees (UK1301019I).

Maternity, paternity and adoption pay

The rate of statutory maternity pay, paternity pay and adoption pay was increased from GBP 135.45 (€159.19 as at 11 June 2013) to GBP 136.78 (€160.77) per week on 7 April 2013.

The Enterprise and Regulatory Reform Act

The Enterprise and Regulatory Reform Act 2013 received royal assent on 25 April 2013. This Act introduces a range of important changes to employment law and tribunal procedures. The following provisions came into force on 25 June 2013.

  • In terms of ‘whistleblowing rights’, the Employment Rights Act 1996 has been amended so that a disclosure will not be protected unless the employee has a reasonable belief that it is made in the public interest. The Act introduces vicarious liability for the employer where a worker is subjected to detriment by a co-worker for making a protected disclosure.
  • The qualifying period of two years’ consecutive employment in a business before a worker may bring an unfair dismissal claim against the employer no longer applies where the reason for the dismissal is the employee’s political opinions or affiliation.
  • The Agricultural Wages Board, an independent body that determines the minimum wage for workers employed in agriculture in England and Wales, has been abolished.
  • Various provisions in the Act are designed to simplify the procedures and reduce the costs involved in deciding employment tribunal cases, including the introduction of an individual cap on compensation of 12 months’ pay, which will apply where this amount is less than the overall cap of GBP 74,200 (€87,226).

Other changes to employment tribunal procedures

Other sections of the Enterprise and Regulatory Reform Act that are expected to be brought into force later in summer or autumn 2013, or by April 2014, include:

  • ministerial powers to make regulations requiring employment tribunals to order an equal pay audit where the employer has breached the equal pay provisions under the Equality Act 2010;
  • the ability of employment tribunals to impose financial penalties on employers who breach employment rights;
  • a requirement for potential claimants to give details of their proposed employment tribunal claim to the Advisory, Conciliation and Arbitration Service (Acas) before commencing proceedings, to enable early conciliation;
  • the renaming of compromise agreements as ‘settlement agreements’, and the publication of a statutory code of practice (226Kb PDF), drawn up by Acas, setting out the principles underlying settlement agreements, model letters, a model settlement agreement and supporting guidance.

Revised employment tribunal rules and introduction of fees

Revised employment tribunal rules of procedure will be introduced from 29 July 2013. These are intended to simplify and streamline the process for dealing with employment tribunal claims. Changes to the rules include combining pre-hearing reviews and case management discussions into a preliminary hearing, new strike-out powers and provisions to encourage alternative dispute resolution. Fees for employment tribunal claims are also to be introduced, as set out in the draft Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013. Two levels of fees are proposed.

  • Level 1 (applicable to claims such as unlawful deduction of wages, statutory redundancy pay and payment in lieu of notice) – a GBP 160 (€188) ‘issue’ fee (when a claim form is presented to an employment tribunal) and a GBP 230 (€270) hearing fee.
  • Level 2 (to apply to claims such as unfair dismissal, discrimination, equal pay and whistleblowing) – a GBP 250 (€294) issue fee and a GBP 950 (€1,117) hearing fee.

Employee shareholder contract

Finally, on 1 September 2013, following the passage of the Growth and Infrastructure Act 2013 through Parliament, a controversial new type of employment contract will become available, that of ‘employee shareholder’ (UK1212049I). Employee shareholders can be given shares in the business worth between GBP 2,000 (€2,351) and GBP 50,000 (€58,794), which will be exempt from capital gains tax, in exchange for forgoing certain employment rights, including protection against unfair dismissal. The government twice suffered defeats on this issue in the House of Lords before concessions were accepted. These include a cooling-off period of seven days and a requirement for independent legal advice before an employee shareholder contract becomes valid.

Mark Hall, IRRU, Warwick Business School

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