No need to share quite so early but beware of redundancy change

The Department for Business Innovation and Skills had originally announced a number of employment law changes which were due to come into force in April. With just a few weeks left however they have announced that some dates will now be set back.

We blogged last week about the new employment status of Employee Shareholder which had been due to start in April 2013. This is no longer going to happen and instead has been pushed back to the autumn, most likely October.

To proposed new time table is:

Spring 2013

Change to collective redundancy

Consolidation of National Minimum Wage Regulations

Summer 2013

Settlement Agreements to be made easier

12 months' pay cap on unfair dismissal compensatory awards

Revised Employment Tribunal Rules
New Tribunal fees
Whistleblowing improvements
Portable DBS (previously CRB) checks

Autumn 2013
New employee shareholder employment status
TUPE regulation reforms

Changes to Redundancy from April

From the 6th April 2013 if employers are making a number of redundancies they should be aware of the new consultation periods.

If it is envisaged that 100 or more employees are going to be made redundant within a 19 day period a minimum period of consultation of 45 days (as opposed to 90 days) will be required. The existing 30 day minimum period where at least 20 but fewer than 100 employees will be made redundant will remain.

Employers must note however that the current 90 day maximum award for a “protected award” where the employer fails to comply with its duty to consult will not be reduced.

A non statutory code of practice will also be issued which is likely to establish guidance on the meaning of the word “Establishment” which has caused a great deal of claims in the Employment Tribunal.

With an ever increasing number of large high street names making large redundancies or closing, employers should keep an eye out for the outcome of the Employment Appeal Tribunals guidance in relation to the collapse of Woolworths and whether an individual store amounted to a separate establishment.

Redundancies appear to be an ongoing issue. Very often employers are aware that redundancies can be an expensive but necessary option to avoid closure. Employers must make sure that they get it right or additional costs and the possible loss of a business is inevitable.

Will you share with your employees?

From April all employers will have the opportunity to share their profits with their employees via the Employee Shareholders Scheme. The intention of the scheme is to encourage small and medium sized to take on staff. Under the scheme employee shareholders will become a new employment status and will mean that in exchange for shares in the company, employees will give up certain legal rights.

Employees will give up the right to make a claim for unfair dismissal, statutory redundancy pay, the right to request flexible working and also the statutory request in relation to study or training. In addition they will need to give 16 weeks notice to return early from additional maternity leave where at the moment it was currently at 8 weeks.

Employees must be given at least £2,000 in shares and the benefits to the employee are that the shares will be exempt from capital gains tax up to a maximum threshold of £50,000.

For employers, it may be an attractive option as two of the most significant employment rights, namely the right to claim unfair dismissal and statutory redundancy payments are being signed away. Automatic unfair dismissals such as being dismissed on the grounds of discrimination or whistle blowing will remain protected.

The big question however is how many employers are prepared to share their profits with their employees and how many employees will actually be advised to give up their employment rights. It is unlikely that the Employee Shareholders Scheme will be attractive to many small employers. Employees who think that they may have a say in the running of the company should be cautious of employers creating shares without a vote. Overall it looks as though this is going to be an unattractive proposition to employers and employees alike.

A Year in employment

It’s been a while since our blogs have been done, in no small part due to maternity leave, so here is a brief summary of the main things that have come up over the last year.

January 2012

Up to £67 million awarded to ex Woolworths staff where administrators failed to comply with their duty to collectively consult. The Tribunal did however treat each Woolworths shop as a separate “establishment” meaning that employees in smaller shops missed out on compensation. Employers should be aware that consultation duties are due to change in 2013. Watch this space for our blog on this issue.

February 2012

Compensation limits rose to a maximum of £12,900 for a basic award and £72,300 for a compensatory award.

Think £85,200 is a lot to lose? The limits went up again in February 2013 and are now £13,500 for the basic award and £74,200 for the compensatory award.

If employers can’t afford to pay out £87k+ in damages they need to make sure that their policies and procedures are accurate and followed appropriately.

April 2012

Anyone employed from 6th April will now have to be employed for 2 years before they are able to bring a claim for ordinary unfair dismissal. Anyone employed before 6th April 2012 will continue to only require 1 year’s service.

Claims where the dismissal is on the grounds of discrimination will continue to have no minimum service required.

May 2012

The Enterprise and Regulatory Reform Bill received its first reading in the House of Commons on 23rd May. The Bill proposed a number of procedural reforms, changes to compensation.

There have been a number of developments in relation to this so watch this space for more updates and blogs specifically relating to the Bill.

June 2012

The Equality and Human Rights Commission (EHRC) published its report “A Perfect Partnership” which reported that disabled people were still put at a disadvantage in the workplace and that employers were confused by what disability means, who is disabled and what support disabled workers might need.

Recommendations within the report were that employers should try to anticipate what adjustments and support may be needed from the outset of employment by manager led discussions and issuing a questionnaire for new starters. I

t also recommended that flexible working should be offered as an option for disabled workers and applicants.

Any employer choosing to use a questionnaire should ensure that the questionnaire does not discriminate against the disabled employee or they may face a substantial claim in the Tribunal.

July 2012

Royal Mail worker Abdul Musa, who was supported by the EHRC, was awarded an undisclosed amount of compensation after successfully showing that he had been dismissed for blowing the whistle on racist behavior.

Employers must ensure that they investigate any complaints made by employees in a timely fashion and must ensure that their Equality policies are up to date and adhered to. The costs of not could be significant.

October 2012

Employers must automatically enroll certain workers into a pension scheme and must pay a minimum level of contributions.

Lap dancing employees?

To qualify to bring a claim against your Employer in the Employment Tribunal, you must, amongst other factors, be an “employee” of the Company, employed under a “Contract of Employment”.

Many employers have made strenuous attempts to try and limit their risk to Employment Tribunal claims by hiring people on, what they say is, a “self-employed” basis, which is normally done by having them enter into complex agreements, which actually have very little resemblance to how the relationship works in practice. Such people are told they have to agree to pay their own tax and national insurance and go without paid holidays. People looking for work often have very little choice but to accept the agreement presented to them.

However, Tribunals are well aware of this power imbalance and take it into account when considering what the correct legal relationship is and establishing whether a person has “employee status”.


However, in an unusual recent case involving a lap dancer at Stringfellows restaurants, there were various documents including the Club Agreement, House Rules, Booklet, license and the Rota. She was described in these as self employed and believed initially that was the case. She only worked on certain nights of the week and danced in accordance with the Rota. However, she was not paid directly by Stringfellows, and instead received vouchers direct from customers, which she then exchanged for cash, having taken into account certain expenses (dress repairs/makeup etc).



After being dismissed from her role, she brought a claim against Stringfellows in the Employment Tribunal, on the basis that she did qualify as an employee. The Employment Appeal Tribunal decided that once there was a contract for paid work, the only issue was whether there was the degree of control necessary to make it into a "contract of employment".



This case once again emphasises the importance of 'control' in determining in many instances what the correct legal position is and whether "employee status" can be established.

If you have control over what, when and how often you work, then you are probably self employed, but if you cannot make these decisions, then there is a substantial likelihood that you are in fact an employee whatever the paperwork says.

New Year - New Changes!

The Law is forever changing in Employment, so here are a few of the key changes Employees and Employers should watch out for this year…

The Awards for Unfair Dismissal Claims are due to rise!

The maximum awards for Unfair Dismissal claims are due to rise in February. As mentioned in our last Blog, this is due to the maximum weekly pay rising from £400 to £430, which in turn means the maximum Basic Award will rise from £12,000 to £12,900 and the maximum Compensatory Award from £68,400 to £72,300.

The rise in Tribunal Awards means Employers should be all the more careful to ensure that they follow the correct Disciplinary and Dismissal Procedures, so as to avoid Employees being able to bring a successful claim in the Tribunal.

Note: The increase in weekly pay will also affect the maximum claim for Redundancy, which will also now rise from £12,000 to £12,900.

The Right to Claim Unfair Dismissal – Good for Employers, bad for Employees

The minimum length of time that an Employee must have worked for their Employer in order to qualify to make a claim for Unfair Dismissal is due to rise in April from one year’s continuous service to two years. Therefore, although the Awards for Claims are rising, the number of claims being made is likely to fall.

Increase in Rates

Also in April, the weekly rates of Statutory Maternity, Paternity and Adoption Leave Pay are due to rise from £128.73 to £135.45. The rate of Statutory Sick Pay will also rise from £81.60 to £85.85.

More Scope for Parents

As from April, parents will now be entitled to take a period of up to four months unpaid Parental Leave, instead of only three months.

Employees should however always refer to their individual Contracts of Employment to see what restrictions or conditions, if any, have been put in place with regards to when and how often the unpaid leave can be taken.

Big Businesses, Big Pensions

As from October, businesses with more than 120,000 employees should ensure their employees are ‘automatically enrolled’ into a pension scheme. It is believed that the ‘automatic-enrollment’ will gradually be introduced to businesses with fewer employees over time.

Tribunal Awards set to increase from February 2012

Just as everyone starts to enjoy some festive cheer, details of how Tribunal awards are going to increase are released.

As from 1st February 2012, new limits for compensation will come into force.

The main changes that employers need to be aware of if that for anyone making a claim in the Tribunal , the maximum rates that they will be able to recover will increase. Largely the increases are in line with the Retail Price Index but even so, any claims that need to be met are going to become more expensive.

The maximum amount that can be awarded for a week s pay will increase from £400 per week to £430 per week, in turn meaning that the maximum compensatory award that the Tribunal will be able to make will increase by £3,900 to £72,300.

Time to cancel Christmas

Cancelling the Christmas party this year might not just save you money in these tight economic times but it may also save you ending up in the Employment Tribunal.

If you are going to celebrat Christmas still and you will provide drinks at the office party, limit the number of free drinks and make sure there are plenty of non alcoholic choices available. This will avoid any issues of religious discrimination. Be prepared to send an employee home if their conduct becomes inappropriate.

Remember that employers can be held responsible for employee’s actions during and after the Christmas party. If your employees have been drinking make sure that they don’t drive home, especially in the Company vehcile, and give some thought to providing pre-arranged transport. It doesn’t have to be at your cost but paying for a cab or mini bus could save you a lot in the long run.

Driving whilst under the influence of drink or drugs in the course of employment can have serious consequences for an employer at Christmas, or any other time. If your employee causes a death as a result of driving under the influence you as the employer can be held liable and the Courts have the power to order huge fines that could bankrupt a small company. Even worse, you could be faced with a prison sentence for corporate manslaughter.

If you are planning on decking the halls of the office with boughs of holly you must also be aware of health and safety issues. The Royal Society for the Prevention of Accidents last year reported that over 1,000 people were injured by unsecured Christmas trees. If you are planning on party balloons, just be aware that over 3.6million people have a latex allergy.

Needless to say, it is essential to make sure that you have an up to date policy and a no-nonsense approach to disciplining any employee found to have acted untowardly at any Christams party or indeed even in the office and it is essential those who are found to be driving whilst under the influence are dealt with swiftly and fairly. Getting this right isn’t just for Christmas.