UK: Employment law reforms - Queen's Speech and consultation on new discrimination law proposals

A number of Government proposals announced in recent months (see here) - and one new proposal - have made their way into this month's Queen's Speech and associated Bills.

The draft Enterprise and Regulatory Reform Bill includes the following:

• a new proposal giving the Secretary of State power to impose a different cap on the compensatory award for unfair dismissal (currently £72,300). The cap set can be (i) a specified amount between one and thee times' median annual earnings (currently £26,200 to £78,600) or (ii) a specific number, not less than 52, multiplied by the individual's weekly pay (the Bill does not specify whether this would be the individual's actual weekly pay or the statutory maximum weekly pay used for calculating various statutory awards) or (iii) the lower of the these two amounts. Different amounts can be specified for different types of employer; the Explanatory Notes suggest that there could be a lower amount for small businesses. 
• claimants are to be required to submit details of their complaint to Acas (the original proposal was for this to be on a new form, shorter than the ET1) and will then be offered pre-claim conciliation for a period to be prescribed by regulation (under the original proposal this would be one month, with a possible two week extension). Time limits for submitting the ET1 will be adjusted accordingly. Acas will have a duty to conciliate if requested by the parties both before and post claim.
• tribunals will have the discretion to order a losing employer to pay a financial penalty to the Exchequer where the employer's breach of employment rights has an "aggravating feature" (a term which is left for the tribunals to define). The Explanatory Notes suggest that this could be "where the action was deliberate or committed with malice, the employer was an organisation with a dedicated human resources team, or where the employer had repeatedly breached the employment right concerned." The Explanatory Notes also suggest that an employment tribunal may be less likely to find aggravating features where an employer has been in operation for only a short period of time, is a micro business, has only a limited human resources function, or the breach was a genuine mistake. The penalty will be 50% of the value of the award to the employee, subject to being within the band of £100 to £5,000, and will be reduced by half if paid within 21 days.
• whistleblowing protection will only be available for disclosures made "in the public interest". This is intended to close the 'Parkins v Sodexho loophole' which currently protects an employee's disclosure of a breach of his own employment contract. However, the lack of any definition of public interest will no doubt give rise to further litigation. The Explanatory Notes state that disclosures excluded by this test will be those which can be characterised as being of a personal rather than wider interest, such as an individual's complaint that he has not received the correct amount of holiday pay. It is more difficult to predict which side of the line an individual's complaint of discrimination will fall. 
• "Legal officers" will be able to take decisions in certain proceedings (yet to be specified) if the parties consent.
• EAT judges will hear cases sitting alone unless they direct otherwise.
• statutory compromise agreements are to be renamed "settlement agreements".
• annual increases to the maximum tribunal awards and statutory redundancy payments will be rounded to the nearest £1 rather than £10/100.

The Children and Families Bill referred to in the Queen's Speech is expected to include the Government's proposals to allow mothers and fathers to share more flexibly the leave entitlement in the first year of the child's life (not expected to apply before April 2015) and to extend the right to request flexible working. A Ministers' letter confirms that the Bill will be scheduled for introduction in the second session in the Commons, early in 2013, and would be carried over into the third session for Royal Assent.

The Government Equalities Office is also consulting until 7 August on three proposals relating to discrimination law. The first, removing the third party harassment provision in the Equality Act 2010, has been trailed before. Although there are certainly problems with the drafting of this provision, its removal would return the law to a state of uncertainty, given unclear caselaw as to whether the general harassment provisions can cover an employer's failure to take reasonable steps in relation to third parties. The other two proposals are new: to abolish the statutory discrimination questionnaire procedure and to remove the tribunals' power to make recommendations beyond those which would benefit an individual claimant (only introduced in the Equality Act 2010). Although the first might reduce an employer's upfront costs incurred in responding to questionnaires, the work may still need to be done later on in proceedings and the opportunity to settle pre-claim may be reduced.

The Beecroft report on employment law reform has also been published this month. The Government has been keen to stress that the report represents only one view and that they are consulting to obtain further views, including on the most controversial proposal for compensated no-fault dismissal. Details of which ideas are being pursued are set out here.

See an article for Employment law Journal by Jemima Coleman for more details on the Enterprise and Regulatory Reform Bill and Children and Families Bill.