What legislative changes are in the pipeline for employers?

Written on 10 Apr 2015

As well as the statutory changes coming into force this April (see here), the end of March also saw a number of Acts gain Royal Assent, including the Small Business Enterprise and Employment Act 2015 (“SBEE”) and the Deregulation Act 2015. These include a number of provisions of interest to employers. However, how and when many of these provisions actually come into force will now depend on any new Government post the General Election on 7 May (see here).

What do we know is coming in?

  • From now: Fit for Work

The occupational health referral service under the Government’s new Fit for Work scheme is currently being rolled out across the country. Please see here for further details.

  • 1 July: Unlawful deductions of wages limited to two years

Unlawful deductions of wages claims brought on or after 1 July 2015 will in general be limited to two years’ back pay (see here).  The EAT also recently held in the holiday pay overtime case (Bear Scotland) that a series of deductions would be broken where there was a gap of more than three months between deductions (see here). These developments are particularly relevant in light of the current holiday pay issues where concerns have been raised that claims for underpayment of holiday pay in light of European requirements could potentially reach back many years.

  • 1 October: Removal of wider recommendations

Employment Tribunals (“ET”) will no longer be able to make recommendations to employers who lose a discrimination case impacting on the wider workforce, such as requiring training for managers. Only the power to make recommendations for the benefit of the individual claimant (who is still in employment) will remain.

  • By 25 March 2016: Gender pay gap disclosure

Regulations must be introduced requiring employers with 250 or more employees to report on their gender pay gap (see here).  The detail will be in regulations still to be drafted and consulted on. Whilst the fine for non-compliance is relatively low, the potential for employee relations and reputational fall out is much higher and this is a development large employers will need to keep a watch on.

  What else is in the pipeline?

  • Zero hours contracts:

The potential abuse by some employers of zero hours contracts (“ZHCs”) has been widely publicised. As a result the SBEE contains a provision requiring that ZHCs (falling within the statutory definition) must not contain an exclusivity clause preventing a worker from taking up other employment opportunities elsewhere. The Government has also published draft regulations in an attempt to avoid abuse of this statutory provision providing that workers must not be subjected to a detriment if they do work elsewhere and that the exclusivity ban also applies to contracts which whilst not technically ZHCs under the SBEE only guarantee the worker a low income. None of these provisions are yet in force. Indeed, Labour has since announced that should it make up the next Government it will take further steps including requiring a worker on a ZHC to be placed on a regular employment contract after 12 weeks where in fact that worker is working regular hours.

  • Employment Tribunals:
    • Under the SBEE, a financial penalty will be payable to the Secretary of State where an employer fails to pay an Employment Tribunal (“ET”) award (or settlement sum via ACAS). The penalty will be 50% of the sum outstanding subject to a minimum of £100 and a maximum of £5000 (with a reduction by 50% where payment is made within 14 days). This is in addition to any penalty awarded against the employer at the ET’s discretion for losing a claim in the first place. This provision has not yet come into force.
    • The SBEE also provides for a limit on the number of postponements that can be requested by a respondent or a claimant in an ET claim. The Government has already consulted on draft regulations to bring this into effect but final regulations are awaited.
  • Financial penalty increase for underpaying National Minimum Wage (“NMW”):

The SBEE increases the maximum penalty on an employer who fails to pay the NMW to £20,000 per underpaid worker (at present it is £20,000 per notice of underpayment issued which may cover a number of workers). No commencement date has yet been set for this provision to come into force.

For further detail on any of these developments please do not hesitate to contact your usual OC Contact. We shall also be updating our interactive HR calendar with key employment law dates here.