The reformist agenda of the coalition government took a major step forward last month with the Enterprise and Regulatory Reform Act 2013 receiving Royal Assent.
This Act forms the centrepiece of the government’s drive to cut red tape and reduce the administrative burden on businesses.
Employment related measures feature heavily in the Act, and will result in a number of changes which employers and employees should take heed of in the months ahead.
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One the most important changes concerns the tribunal claims process, which will now be made subject to a mandatory ACAS conciliation period.
Claimants will have to go through this process before they can issue a claim.
In order to give further encouragement to parties to settle claims, compromise agreements will be renamed as settlement agreements, with additional guidance and protection being given to employers on the admissibility of settlement negotiations should the matter result in a tribunal claim.
To further reduce the burden on the already overstretched tribunal service, it will be possible in future for straightforward cases to be heard by a “legal officer’ rather than a tribunal judge, provided the parties consent in writing. The Act will also allow the Government to reduce the maximum compensatory award for unfair dismissal. This is a key development.
Although the maximum compensatory award is only relevant for a tiny minority of tribunal claims, it is still seen as having a powerful psychological influence on parties’ willingness to litigate and settle claims.
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Tribunals will also be given the power to order employers to impose financial penalties (payable to the Government) of up to £5,000 where there is a successful claim with aggravating features.
Discrimination law will not be immune from the changes either. The widely criticised and often misused statutory discrimination questionnaire process will be abolished, along with provisions in the Equality Act which outlaw third party discrimination.
The Act also paves the way for tribunals to order employers to carry out equal pay audits where the employer loses an equal pay claim or sex discrimination claim relating to pay.
The Government has opted to drip feed the changes over the coming months, mindful of the fact that too much change in one go can often have a negative effect. The first significant changes will be on 25 June 2013, with further changes to follow in October 2013 or April 2014.
* Benedict Gorner is employment partner in DLA Piper’s Birmingham office.
Benedict.gorner@dlapiper.com