The Small Business, Enterprise and Employment Act 2015 (the “Act”) was recently passed by Parliament. This week we reflect on the employment law changes it implements.
- Zero hours contracts
Zero hours contracts have been the subject of much discussion in the run up to the General Election next month. In particular, there has been much criticism of exclusivity clauses being used within zero hours contracts. One of the positive aspects of a zero hours contract is that it should give both parties the flexibility to offer or take work. By including exclusivity clauses it effectively means the individual has to accept this work as they are prohibited from seeking work elsewhere. This Act makes exclusivity clauses unenforceable.
- Termination payments in the public sector
The Act provides for regulations to be implemented to require individuals in the public sector to repay termination payments (including redundancy payments and payments on voluntary termination) if they return to work within the public sector. These provisions would apply to employees earning above £100,000 a year.
Although the most common whistleblowing claims are made by employees to their employers, they can also be made to “prescribed persons” – for example HMRC, the Environment Agency, the Health & Safety Executive and the Financial Conduct Authority. The Act makes new provision to require annual reporting by these prescribed bodies. One of the items the reporting must include is the number of public interest complaints (i.e. whistleblowing complaints) received and the action the body has taken in response.
- Equal Pay Reporting
At present, only private sector employers are required to publish data relating to gender pay if they lose an equal pay claim in the Employment Tribunal. This Act provides for regulations requiring businesses with more than 250 employees to publish this data. There are, however, many questions unanswered by the provisions of the Act: exactly what data will need to be published and how often? We await separate regulations on this point so watch this space.
- Tribunal changes
The Act introduces two changes which directly relate to Employment Tribunals.
a. It provides for regulations to be implemented to limit the number of postponements of a hearing that a tribunalmay grant a party to proceedings, and to require a tribunal to consider making a costs award against a party where they have made a late application for postponement.
b. The Act also introduces an enforcement system for unpaid tribunal awards. The first stage would be for an enforcement office giving the employer 28 days to pay the award, followed by a penalty notice (if the award remains unpaid) requiring the employer to pay a fine to the Secretary of State of between £100 and £5,000. This system will also apply to unpaid settlements made through ACAS and using a COT3 form.
- National Minimum Wage
The Act amends the National Minimum Wage Act 1998 so that the maximum penalty for underpayment of the national minimum wage can be imposed for each underpaid worker, as opposed to being the total penalty imposed for all workers. This is certainly a big change. We will report on other national minimum wage enforcement proceedings and changes next week.
Will these changes make a difference?
It should be noted that all of these changes will need separate regulations passed through Parliament before they are enforceable. Given that the Act has been passed just before the General Election, the next government may not agree with any of the proposed provisions. The provisions in the Small Business, Enterprise and Employment Act 2015 could make a difference to the perceived imbalance of rights between employers and employees; the majority of provisions appear to have an underlying “accountability” theme.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.