6 April 2014 A Key Date for Employment Law Changes

On 6 April 2014, the below key changes came into force:

Increase to Employment Tribunal fees – there has been a re-categorisation of a number of “Type B” claims, which attract a higher fee. This is to remedy what the Government has identified as a mistake in the original legislation which categorised certain claims incorrectly as “Type A”.

Financial penalties for losing employers – Tribunals now have the power to order that a losing employer pay a financial penalty (of between £100 and £5,000) where the case has “aggravating features”. This will apply in cases presented on or after 6 April 2014.

The introduction of this penalty sends out mixed messages. On the one hand the Government is trying to reduce burdens on business, making it less costly for employers to be faced with Tribunal claims. However, on the other hand, given litigation risk and the prospect of a potentially heavy fine, employers may feel that they are being put under undue pressure to settle unmeritorious claims.

There is also a lack of clarity on what will amount to “aggravating features”, which are not explained or defined in the legislation. The Government has suggested that Tribunals would impose such penalties where “the breach involves unreasonable behaviour” (for example negligence or malice). However, genuine mistakes by the employer will not be penalised.

The abolition of the Percentage Threshold Scheme – which currently enables employers to reclaim Statutory Sick Pay from HMRC in some circumstances, has been abolished. This will no doubt be an unwelcome change for employers.

Increases to rates and limits:

• The maximum compensatory award for unfair dismissals where the effective date of termination falls on or after 6 April 2014 has increased to £76,574 (or 52 weeks’ gross pay, if lower).

• Statutory Sick Pay has increased to £87.55 per week (the lower earnings limit will also increase to £111.00 per week).

• Statutory Maternity, Paternity and Adoption Pay has increased to £138.18 per week.

• The maximum weekly payment (used for calculating redundancy) has also increased to £464 per week.

The maximum civil penalty for employing adult illegal workers – who are subject to immigration control but who do not have the right to work in the UK has increased from £10,000 to £20,000.

Mandatory pre-claim ACAS conciliation – this involves a four step procedure of early conciliation through ACAS before a Tribunal claim can be commenced. Transitional provisions cover the period between 6 April and 5 May 2014 where early conciliation will be voluntary but, for claims issued on or after 6 May 2014, it will be mandatory.

This is a substantial change in Employment Law as it has never before been mandatory for parties to Tribunal proceedings to consider conciliation. Pre-claim conciliation is part of the Government’s aims to increase the efficiency of the Tribunal service however, it remains to be seen whether it will have the desired effect.