Small Business, Enterprise and Employment Bill published: Employment Related Provisions

The Government published the Small Business, Employment and Enterprise Bill on the 25th June.

The Bill is intended to, among other things “increase the efficiency of the employment tribunals system and further reduce its burden on small businesses”.

Part 11 of the Bill contains its employment-related provisions:

  • Clause 135 would insert a new section into the Employment Rights Act 1996 requiring ‘prescribed persons’, to whom whistleblowing disclosures can be made, to report annually on the disclosures they receive, but without identifying the workers or employers concerned.
  • Clause 136 would create a financial penalty for employers who fail to pay sums ordered by an employment tribunal or owed under settlement agreements reached following Acas conciliation. Currently only around half of all claimants who are successful at tribunal are actually paid their tribunal awards. Under the proposed system, where an enforcement officer considers that an employer has failed to pay, he or she may send the employer a warning notice stating that an additional financial penalty will be imposed unless the outstanding amount is paid in full by a specified date. If the employer does not pay by a specified date, the officer may issue the employer with a penalty notice requiring the employer to pay the Secretary of State a financial penalty of 50% of the original award or settlement amount (subject to a minimum of £100 and a maximum of £5,000). The penalty will be reduced to 50% if within 14 days the employer pays both the outstanding amount to the employee and the reduced penalty.
  • Clause 137 would allow for the Employment Tribunal Rules of Procedure to limit the number of successful applications for postponements a party can have in a case, other than in exceptional circumstances. This clause would also require the costs regime to be amended so that the tribunal will be obliged to consider making an order for costs against a party who makes a late application to postpone or adjourn a hearing. Regulations will specify a time by reference to which the tribunal will determine whether an application is ‘late’.
  • Since 7 March 2014, the maximum penalty for failure to pay the national minimum wage has been £20,000. Clause 138 would increase the maximum financial penalty for underpayment of the national minimum wage to £20,000 per worker.
  • Clause 139 would amend the Employment Rights Act 1996 to define zero-hours contracts and make exclusivity clauses in zero hours contracts unenforceable. It would allow the Secretary of State to make wide-ranging regulations to ensure that zero-hours workers are not restricted from doing other work.
  • Clauses 140 to 142 would allow the Treasury to make regulations requiring public sector employees and office-holders to repay ‘exit payments’, in certain circumstances, including if they are re-employed in the public sector within a prescribed period. The appropriate Secretary of State will be able to waive this requirement in certain circumstances. The definition of ‘exit payments’ includes, amongst other types of payment; redundancy payments; payments on voluntary departure; any severance payment or other ex gratia payment; payment in lieu of notice and compensation payable under a contractual term.

For more information, please contact a member of the Employment Team.

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