Employment Act 2008 - Law Reform
The Employment Act 2008 ("the Act"), which received Royal Assent in November 2008, will come into force during the course of 2009.
Whilst most of the changes provided for by the Act are fairly minor, there is one significant change; the much anticipated repeal of the statutory dispute resolution procedures.
These procedures have been unpopular since their introduction in 2004 because they are unnecessarily complex and the law surrounding them is difficult to interpret.
The other areas where changes will be made are as follows:
- dispute resolution in general;
- national minimum wage; and
- employment agencies.
This focus sheet provides an overview of the proposed changes. Although much of the Act is scheduled to come into force on 6 April 2009, it should be noted that enactment dates for the rest of the Act are yet to be confirmed.
1. Statutory Dispute Resolution Procedures
Section 1 of the Act will repeal sections 29-32 and schedule 2 to 4 of the Employment Act 2002. It therefore removes the requirement to follow either the statutory dismissal, disciplinary or grievance procedures.
At present it is anticipated this change will take place on 6 April and in practical terms this will mean:
- employees will no longer be barred from bringing a claim where they have not raised a grievance with their employer and waited 28 days;
- dismissals will not be automatically unfair where the statutory procedures have not been followed by the employer;
- the Tribunals’ power to increase or decrease awards by up to 50% for non-compliance with the procedures will no longer apply; and
- the automatic extension to the three month time limit where statutory procedures are ongoing will be abolished.
2. Procedural Breaches
The Act will also repeal section 98A of the 2002 Act. This means that the fairness of a dismissal will no longer depend on compliance with the statutory disciplinary and dismissal procedures. The Tribunal will instead be expected to apply the House of Lords’ decision in Polkey v A E Drayton and similar cases.
Polkey provides that where a dismissal is procedurally unfair, a Tribunal may reduce or eliminate compensation based on their opinion of whether the dismissal would have occurred regardless of the procedural unfairness.
3. Acas Code of Practice
Acas has and will be publishing codes of practice which will aid employers, employees and their representatives on how to conduct certain employment related issues. These codes set out best practice principles which should be followed.
The Code of Practice on Disciplinary and Grievance Procedures ("the Code") will come into force on 6 April and will replace the statutory dismissal and grievance procedures.
Unlike the statutory procedures, the Code is not legally binding. However, the principles of the Code will be considered by a Tribunal when deciding the fairness of a dismissal and levels of compensation.
An employer or employee who unreasonably fails to comply with the provisions of the Code will have the compensation figure increased or decreased by 25%.
The Code has been approved by the Secretary of State for Business, Enterprise and Regulatory Reform (BERR) but is awaiting parliamentary approval. A copy of the present draft is available at: http://www.acas.org.uk/CHttpHandler.ashx?id=961&p=0
In addition to the Code, Acas have published a lengthy guidance booklet to complement the Code. The purpose of the guide is to assist employers and employees to adhere to the provisions of the Code. The guide provides example disciplinary and grievance procedures which employers may wish to adopt but, like the Code, is not legally binding. A draft copy of the guidance booklet is available at: http://www.acas.org.uk/CHttpHandler.ashx?id=981&p=0
It is worth noting that neither the Code nor the guidance are necessarily in their final form and may be subject to changes before 6 April 2009.
We would recommend that employers and employees take the time to read the Code along with its guidance and that employers consider incorporating its principles into the staff handbooks in the same way the statutory procedures have been.
Time will tell how efficient and useful the new concepts of dispute resolution will be in assisting employers and employees. However, it is hoped they will be more successful than their predecessor!
Section 4 of the Act will give Tribunals the power to determine cases without the need for the case to be heard by an Employment Judge or Tribunal Panel. Under the Act, a case will only be eligible to be "fast-tracked" in the following circumstances:
- all parties to the proceedings have given written consent to determination without a hearing; or
- the Respondent(s) to the case have failed to respond to the proceedings or do not contest the case.
5. Acas Conciliation
Conciliation before the bringing of proceedings
The Act will amend the Employment Tribunal Act 1996 so that Acas is no longer under a duty to conciliate and promote a settlement before proceedings have actually been brought.
It will be at Acas’ discretion to provide this service where they deem necessary. This allows Acas to prioritise cases and divert time and effort from cases where there is no prospect of success.
In cases where there is potentially an unfair dismissal, the Acas conciliator is no longer under an obligation to seek reinstatement or re-engagement but may still pursue this remedy where they see fit to do so.
Conciliation after proceedings have been brought
Whereas Acas is currently only obliged to conciliate and promote settlement between parties for a fixed period of time once proceedings have commenced, the Act extends this obligation to cover the period up and until the Tribunal’s decision. It is anticipated that the above changes will come into force on 6 April 2009.
6. Calculating National Minimum Wage
The Act will change the law relating to the enforcement of the payment of the National Minimum Wage ("NMW"). In summary it provides the following:
- a new method of circulating underpayment of NMW taking into account any increases to the NMW for the period of underpayment. Indeed, the formula provides that the NMW at the date of determination be used which could result in any underpayment being paid at the higher rate for the entire period of underpayment if there has been an increase in the NMW.
- an employer who fails to comply with an employee’s notice of underpayment within 28 days of service, will be liable to pay a financial penalty of up to 50% of the total amount of underpayment. There is no longer a separate requirement for a penalty notice imposing the financial penalty to be issued, as this is now incorporated into the initial notice of underpayment. Penalty limits are set at a £100 minimum and a £5,000 maximum.
7. Trade Unions
In ASLEF v The United Kingdom, it was held that the provision in section 174 of the Trade Union and Labour Relations (Consolidation) Act 1992 was contrary to European Convention’s right of freedom of association.
Section 174 provides grounds when a trade union may exclude or expel a person from trade union membership but specifically states that it is unlawful to exclude a person because of "protected conduct". Protected conduct includes being or having been a member of a political party.
ASLEF, the trade union, had a policy which refused membership to people who were members of the British National Party. Following the Tribunal decision which branded the policy unlawful, ASLEF applied to the European Court of Human Rights on the basis that the law itself was in contravention of Article 11, Freedom of Association. It was held that the UK legislation was in violation of Article 11 by not properly balancing the rights of the trade union’s right to choose its member, against an individual’s right to membership.
The Act proposes changes to section 174 which will codify the decision in ASLEF and give trade unions broader discretion in excluding or expelling members.
8. Employment Agencies
Changes to the Employment Agencies Act 1973 are minor but include the following:
- offences under the Employment Agencies Act may now be dealt with by the Crown Court (with power to impose unlimited fines). Previously such offences were dealt with by the Magistrates’ Court;
- Employment Agency Standards Inspectorate will be given additional inspection powers; and
- individual partners will be liable for offences under the Employment Agencies Act 1973 where the offence has been committed by partnership in Scotland.
If you wish to copy this Focus Sheet please do so, but please acknowledge its source. For further advice or more information, please speak to your usual Laytons contact or one of the team at the addresses set out below:
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For PDF version of this focus sheet please click here