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New year, new employment law

The new year is to be an important one for employment law. Statutory measures for whistleblowing and termination payments will take effect in…

The new year is to be an important one for employment law. Statutory measures for whistleblowing and termination payments will take effect in January as per the Small Business Enterprise and Employment Act (“SBEEA”). Amongst other things, the SBEEA will introduce to the Secretary of State new powers of disclosure and the ability to introduce a ‘qualifying exit payment’ to certain public sector workers. Louise Singh looks ahead at what’s to come…

January 2016 heralds a number of important employment law changes. The Small Business Enterprise and Employment Act (SBEEA) became law on 30 March 2015, but its key provisions have been ‘phased in’ over an extended period. Important measures relating to whistleblowing and termination payments take effect this month. Other regulations amending the law on Zero Hours Contracts and ACAS Early Conciliation will also be introduced in the coming weeks to kick off a busy employment law year.

Protected disclosures

Section 148 SBEEA, which came into force on 1 January 2015, gives the Secretary of State power to require certain bodies to report annually on disclosure by workers. Currently, only certain ‘prescribed persons’ are affected. A list of ‘prescribed persons’ is maintained by the Government and primarily includes regulatory bodies to which an employee can make a ‘protected disclosure’ about workplace issues (for example Ofsted or the Health and Safety Executive). However the Secretary of State also now has the power to make further regulations setting out additional bodies to report annually.

This is an important development as, under existing legislation, there is no legal obligation on ‘prescribed persons’ to take any action in relation to the public interest disclosures they receive. Reassuringly, the clause makes provisions to protect both the identity of the individual who has made the disclosure and the employer or organisation to which the disclosure relates.

Further regulations will prescribe the content of the report and how and when it must be published.

Public sector exit payments

Sections 154-157 SBEEA, also came into force on 1 January 2016, which give the Government power to make regulations requiring certain public sector workers to repay some or all of any ‘qualifying exit payment’ in certain circumstances. A ‘qualifying exit payment’ will include voluntary or compulsory redundancy, payments in lieu of notice, payments to reduce or eliminate an actuarial reduction to a pension on early retirement, and ‘special severance’ payments such as those agreed in settlement of threatened litigation.

The legislation states that repayment could be required if the employee or office-holder is re-employed or engaged as a contractor in the public sector or is appointed to a public sector office within one year of their exit. Further details are included in the supporting Repayment of Public Sector Exit Payments Regulations 2015. These Regulations have very recently been published in draft and are set to come into force on 1 April 2016. However a consultation is currently taking place on the content of the draft Regulations which may result in some changes being made.

The draft Regulations broaden the Government’s original proposals stipulating that exit payments will be recoverable when the individual returns to any part of the public sector (rather than the same part of the public sector as formerly proposed). Also, the previous starting point was that recovery would apply only to individuals earning £100,000 or more. It is now proposed that this minimum salary threshold should be set at £80,000. The draft Regulations also set out provisions to ‘taper’ the amount of the exit payment repayable according to the period of time between receipt of the payment and re-entry into the public sector.

Exclusivity in zero hours contracts

Since 26 May 2015 any ‘exclusivity clause’, or provision in a zero-hours contract which prohibits the worker from doing work under any other arrangement, has been unenforceable. However, crucially, there was no specific remedy available for a worker who was penalised for breaching an exclusivity arrangement.

The new Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015, which came into force on 11 January 2016, rectify this by creating a right for an employee on a zero hours contract not to be unfairly dismissed for breach of such a provision. A worker who works under a zero-hours contract has the right not to be subject to any detriment for the same reason. The individual may present a complaint to an employment tribunal within three months of the act complained of and may be awarded whatever compensation the tribunal considers ‘just and equitable’.

This is a huge legal leap as, previously, the right to claim unfair dismissal has been available only to employees working under a ‘contract of employment’. It can often be difficult to determine whether an individual on a zero-hours contract is an employee or worker and, in the past, a careful factual analysis has been required to determine whether an unfair dismissal claim can be made.

While the new Regulations do not create a free-standing right to claim unfair dismissal for workers (as opposed to employees) they make clear that the termination of the worker’s contract will be regarded as a detriment and that the limit placed on compensation should be the same as those for ‘normal’ unfair dismissal claims. This appears to provide redress equivalent to an unfair dismissal claim for zero-hours workers, where the reason for termination of the contract is the breach of an unenforceable exclusivity provision.

Tread with care if you are terminating the contract of a consultant engaged on a contract which specifically requires an individual to do the work, or you are ceasing to use other ‘as and when required’ workers, if they have previously raised with you concerns about limits upon their ability to work elsewhere.

Early conciliation

Also in force from 11 January 2016 is the Employment Tribunals Act 1996 (Application of Conciliation Provisions) Order 2015.

The Order simply adds the new right of redress relating to exclusivity provisions in zero-hours contracts (see above) to the list of ‘relevant proceedings’ for the purposes of ACAS early conciliation. This means that any employee or worker wishing to make a claim under the new provisions must go through the early conciliation process first before submitting their complaint to an employment tribunal. The Order also makes clear that the three month limitation period for bringing a claim regarding this issue will be extended in the usual way to allow early conciliation to take place.

We will of course keep you updated regarding key legislative developments throughout the year. Please do not hesitate to contact us if you have any queries.