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Enterprise and Regulatory Reform Bill 
 
Following on from our update on this Bill's progression through Parliament last month, it is worth commenting on a couple of other provisions contained within the Enterprise and Regulatory Reform Bill. 
 
Firstly; a clause within the Bill will introduce the concept of ‘financial penalties’ for employers whose breach of an individuals’ employment rights are found to have been done maliciously or negligently. This penalty will be over and above any award made to the employee and will be paid to the Chancellor of the Exchequer, not the employee. A minimum amount of £100 will be applied rising to a maximum of £5000 and the penalty applied will generally be half of the amount awarded to the employee, subject to these boundaries. Employers will be given the opportunity to reduce the penalty by half if they make the payment within 21-days. 
 
Secondly; a further clause within the Bill will require Tribunals to give due regard to an employer’s ability to pay before imposing financial penalties. They will be given the authority to take into account any factors that they deem relevant in determining this, which may include; the size of the employer, the duration over which the breach of employment right occurred and the behaviour of both the employer and employee. 
 
The Bill itself has progressed through its third reading in the House of Lords and the next stage, known as ‘ping pong’ (when the Bill will be passed backwards and forward between the two Houses until agreement is reached) is scheduled to take place on 16th April 2013. 
 
Protection of Political Opinions  
 
UK law is to be revised to afford protection to employees for their political affiliations and opinions, following the decision taken by the European Court of Human Rights (ECHR) in the case of Redfearn v. United Kingdom. In brief; Redfearn was a bus driver who was dismissed after being elected as a local councillor for the BNP. There were no issues with his conduct or performance and he had in fact been nominated by his manager for a ‘first class employee’ award. However, as a large proportion of his passengers were Asian, his employer took the decision to dismiss him. 
 
At the time of dismissal, Redfearn did not have the requisite one-years qualifying service needed to bring an unfair dismissal claim and he was also unable to bring a claim under the ‘religion and belief’ regulations (now incorporated into the Equality Act 2010) due to the regulations at the time stipulating that a ‘philosophical belief’ had to be ‘similar’ to a religion to qualify and political membership was therefore not protected; he therefore brought a claim under race discrimination provisions. He was not successful with this claim in the UK courts and he then sought a ruling from the ECHR. 
 
In its ruling, the ECHR held that UK law is in violation of EU law because it does not extend specific protection to employees dismissed on the grounds of their political beliefs or affiliation. The Human Rights Convention, which provides a universal right of freedom of assembly, applies to all associations not just political parties and according to the ECHR, this includes associations whose views ‘offend, shock or disturb’. This right is also enshrined in the UK’s enactment of the convention; article 11 of the Human Rights Act 1998. 
 
Following this case, the UK Government has decided not to appeal against the decision and must now change the law to afford all employees protection of their right to freedom of association. This will be achieved by tabling an amendment to the Enterprise and Regulatory Reform Bill to amend the Employment Rights Act 1996 section 108, to exempt unfair dismissal claimants from the two-year qualifying period where they allege that the reason or the principle reason for their dismissal relates to their political opinions or affiliation. The change will come into effect two months after the Bill receives Royal Assent and will apply to dismissals after that date. 
 
However, it should be noted that such dismissals will not automatically be unfair, it just means that there is no qualifying period for bringing what will otherwise be treated as an automatically unfair dismissal. Further, the amendment does not appear to define what is meant by ‘political opinion or affiliation’. 
 
At this stage, it is felt that whether a dismissal will be fair or unfair will largely be based on the nature of the job and the organisation that the employee was working for. Where an employer can demonstrate that affiliation/membership of certain organisations is not compatible with the work being undertaken and have clear policies which state this to be the case or; where the employer has a strong ideological views on social or political issues on which their overall ethos is grounded, they are more likely to be able to justify a dismissal on grounds of political opinion/affiliation. However, where a dismissal occurs because the employer believes that the political opinion/affiliation of the employee will result in bad publicity or public relations, it is unlikely that this will stand up to the scrutiny of the Courts. 
 
Owner-Employee Contracts ~ Update 
 
Last month; we reported that despite widespread opposition from businesses and particularly from Trades Unions to the Government’s proposals to introduce a new category of worker, that of ‘Owner-Employee’, it was intended by the Government to press ahead with the introduction of this policy from April 2013, latterly moved to the autumn of 2013. However, in what can best be described as ‘an eleventh hour’ intervention, the House of Lords have overwhelmingly voted against the relevant clause in the ‘Growth and Infrastructure Bill’, by 232 votes to 178. 
 
The proposal has been described by Lord Forsyth as ‘ill thought through, confused and muddled’ and Lord Adonis expressed his opinion on the clause as ‘to my mind, when you have a totally mad idea like the one before us, the best thing is not to test it out, but to kill it at birth and I hope that this is what we are going to do.’ As yet, there does not appear to be any comment to this latest development from the Chancellor, who originally announced the policy as part of his autumn statement in 2012. 
 
The Bill will now return to the House of Commons where it will be down to MPs to determine if the clause should be reinstated, changed or dropped before the Bill is passed through Parliament and we will continue to monitor its progress and report back. 
 
Budget 2013 ~ Employment Round-up 
 
In case you missed it... The Chancellor announced his budget on March 20th 2013 and the key points impacting upon employment are summarised below: - 
The 1% cap on public sector pay rises will be extended until 2015/16, with the exception of the Armed Forces. 
The personal allowance for income tax was increased to £9,440 on 6th April 2013, for those born after 5th April 1948 and this will increase to £10,000 on 6th April 2014. 
National Minimum Wage – the existing 17 pieces of legislation covering this will be amalgamated into one set of regulations. This has been promised by the end of April 2013, but no sign as yet! 
 
Other changes which were announced and which will be brought in over an extended period include: - 
 
Tax relief of up to £500 on health related interventions recommended by the Health and Work Assessment and Advisory Service for those with long-term health conditions. 
Tax free loans to employees will be doubled to £10,000 with effect from the 2014/15 tax year and as long as the outstanding balance does not exceed this threshold at any point during the financial year, tax will not be chargeable. 
The Chancellor announced the level of shares which can be held as free from tax and national insurance for employee-shareholders and similarly, the exemption levels for capital gains tax. However, review the point below for an update on this proposal... 
Working parents will receive 20% tax relief on the first £6,000 of childcare costs to a maximum of £1200 per child; subject to various conditions including earnings and other support i.e. universal tax credits that the parents are in receipt of. Initially, this will apply to children up to the age of 5, but will be extended to cover children up to the age of 12. 
The flat rate pension will be introduced in 2016 rather than 2017 and the Pensions Bill 2013 will be redrafted to reflect this change. 
Extension of Flexible Working Rights 
 
ACAS have now launched their consultation into draft code of practice on the extension to the right to request flexible working to all employees who have 26 weeks’ continuous service with their employer. The consultation will run for a period of 12-weeks and close on 20th May 2013. 
 
As well as seeking the views of employers and employees generally, ACAS are particularly keen to hear the views of small businesses who may not have their own in-house HR function and who therefore may find it particularly challenging to manage employee requests for flexible working. 
 
Code of Practice on Settlement Agreements 
 
ACAS have published a draft Code of Practice on Settlement Agreements (formerly known as compromise agreements) and have just closed the consultation exercise seeking views on this. This Code will accompany the forthcoming legislation on such agreements; which will make any pre-termination negotiations inadmissible in unfair dismissal complaints provided that neither party has engaged in improper behaviour in the course of such negotiations. 
 
Once finalised, the Code will also include some non-statutory guidance which will include expectations of what will be considered to be ‘best practice’ when handling such settlement agreements and the negotiations required to reach that agreement. 
 
Within the consultation, ACAS have suggested that: - 
initial offers of a settlement agreement should be put in writing 
a period of 7-days should be a reasonable minimum amount of time for a settlement agreement to be considered 
although there is no legal obligation to do so, employers should allow employees to be accompanied during any meeting at which an agreement is to be discussed 
 
Also included within the consultation were some examples of what might constitute ‘improper behaviour’ and/or undue pressure that might normally result in the removal of the legal protection; as well as some templates for letters, for which ACAS has sought views on the wording of these and where they would be best placed i.e. in the Code of Practice or non-statutory guidance. 
 
It should be noted that although the guidance is ‘non-statutory’; as with other such documents it is probable that this will become a benchmark for employers. The legislation and the code/guidance are expected to come into force during the summer of 2013 
 
NHS 'Gagging Clauses' 
 
These clauses are normally found within settlement agreements for individuals who are leaving their position/employment under some form of agreement to leave and which prevent that individual from disclosing any details connected with their employment or subsequent departure from the Organisation, including the terms of the agreement itself. 
 
However, following the recent wide-spread publicity concerning the former NHS Chief Executive of United Lincolnshire Hospital Trust and his decision to speak publicly about his concerns for patient safety in the Trust, which breached the terms of his settlement agreement, an announcement has been made by the Health Secretary which effectively ‘bans’ such clauses in agreements with former NHS employees. 
 
This ‘ban’ has been implemented with immediate effect and will also be applied retrospectively to agreements that were in place prior to the introduction of the ban. Further, any such agreements must state that individuals are not ‘prevented from whistleblowing’. This in effect means that those former NHS employees, who have legitimate concerns about patient safety and care in their former place of work, can now raise these concerns without any adverse affect on them or their settlement agreement. 
 
However, it should be noted that this change does not give employees ‘carte blanche’ to launch unfounded and disparaging remarks against their former employers. Further, this change has only been introduced to cover agreements made between the NHS and its employees and at this time, the use of ‘gagging clauses’ is still permitted in other industries/professions. 
 
'The Apprentice' ~ You're 'not' Fired! 
 
Lord Sugar is celebrating this evening, having received news from the Employment Tribunal that Stella English, a former winner of ‘The Apprentice’ has been unsuccessful in her claim for constructive Dismissal. 
 
Ms English had claimed that she was an ‘overpaid lackey’ and had been told by her manager within one of Lord Sugar’s business that there ‘was no job for her’, despite her receiving a £100,000 per annum salary. When she resigned from the initial post, she was offered a further role by Lord Sugar in his ‘YouView’ business and it was from this position that Ms English subsequently resigned and claimed constructive dismissal. 
 
In a written judgment, Judge John Warren said: "This was a claim which should never have been brought. ... There was no assurance or suggestion that the winner would receive direct mentoring from Lord Sugar...” 
 
Judge Warren went onto state "The claimant was clear herself about this - she knew full well the job she (would) do at Viglen when she accepted the prize. She told the nation on the BBC Breakfast TV show." 
 
The judge found that Ms English was given a "real job" at Viglen, with "enormous scope for advancement and learning" adding "The Viglen role was specifically selected for the claimant to expand and build on her already acknowledged experience and ability" he said. 
 
Judge Warren concluded "The respondent (Lord Sugar) had gone out of (his) way to ensure the claimant was placed in a role at YouView from which she could learn new skills, a job which she agreed to and which she enjoyed doing." 
 
In response to the outcome of the hearing, Lord Sugar has stated - "There was never a case for us to answer but her need for money and fame meant that the whole system was subjected to this charade... I have been cleared of a derisory attempt to smear my name and extract money from me... The allegations were without substance, and I believe this case was brought with one intention in mind - the presumption that I would not attend the tribunal, that I would not testify and that I would settle out of court, sending Ms English on her way with a tidy settlement... I'm afraid she underestimated me and her reputation is now in tatters." 
 
 
 
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