Enterprise and Regulatory Reform Bill

ERR 48

Submission from UNISON

1. UNISON is the UK's largest public services trade union with more than 1.3 million members. Our members are people working in the public services, for private contractors providing public services and in the essential utilities. They include frontline staff and managers working full or part time in local authorities, the NHS, the police service, universities, colleges and schools, the electricity, gas and water industries, transport and the voluntary sector

We have extensive experience of employment relations in small and large organisations including dispute resolution and efficiently negotiating fair pay and conditions for all employees.

2. The Enterprise and Re gulatory Reform Bill 2012 contains the following employment measu r es :

· The introducti on of early conciliation at ACAS for all potential employment

· tribunal claims. All claims must be sent to ACAS before they can be submitted to an employment tribunal. However conciliation will remain voluntary and free. The Bill also adjusts time limits for employment tribunal claims to allow for early conciliation at ACAS .

· Permitting ‘legal officers’ in the Employment Tribunals to decide certain types of cases where the parties have agreed in writing.

· Employment Appeal Tribunal (EAT) cases in the future will be decided by Judges sitting alone, unless the Judge decides that employer and employee representatives should be involved.

· Protected Conversations that cannot be used in Tribunals .

· New powers for the Secretary of State to reduce compensatory awards in unfair .

· dismissal cases to a maximum of :

- b etween median annual earnings and three times median annual earnings (currently median earnings are £26,000 and three times median earnings is £78,000)

- One year’s earnings

· New powers for the Secretary of State to vary compensation awards for unfair dismissal firms by type of firms, including in small businesses.

· New powers for employment tribunals to impose financial penalties equivalent to 50% of any compensation award on employers who have breached employment laws. The penalties will only apply where the tribunal decides there are ‘aggravating features’. The penalties will be paid to the State and not the individuals concerned, will be subject to a minimum of £100 and a maximum of £5,000; and can be reduced by 50% if the employer pays within 21 days.

· Whistle-blowing rights will be limited to situations where a worker believed that a disclosure was made in the public interest and can demonstrate that this belief was reasonable in the circumstances.

· In the future annual increases to the statutory limits, used when calculating an employee’s entitlement to statutory redundancy pay, will no longer be rounded up to the nearest £10 or £100.

· ‘Compromise agreements’ will be renamed as ‘settlement agreements’.

· New powers to introduce ‘sunset clauses’ or ‘review provisions’ into legislation.

· The Bill will also limit the powers of the Equality and Human Rights Commission.

ACAS Early Conciliation (Clauses 7, 8 and 9)

3. Under the present system, all claims that are submitted to an Employment Tribunal are also submitted to ACAS and an ACAS Conciliator is appointed. The Bill proposes to change this system to involve ACAS prior to the submission of an Employment Tribunal claim through proposed new sections 18A and 18B of the Employment Tribunals Act 1996. This would require mandatory submission of a claim to ACAS prior to the filing of an Employment Tribunal claim in most circumstances (unless the claim is a multiple claim that has already been filed).

4. UNISON generally supports any efforts that assist workers and employers to efficiently resolve workplace disputes, and would welcome further resources dedicated to this goal. However, UNISON is concerned that that this will require a considerable amount of additional resources and do not consider that ACAS has presently has the capacity to provide the additional required assistance to conciliate disputes.

5. The Bill does not provide sufficient detail to comment in full on how conciliation will work in practice and there needs to be further consultation on the proposed future regulations. It is suggested that the period of conciliation is one month, this may be sufficient if ACAS has staff available to conciliated disputes as soon as they are notified of them and both the employer and worker actively engage in the process, however, UNISON is concerned that this time period may not be sufficient if ACAS or the parties, for some reason, are not immediately available.

6. UNISON understands that it is proposed that a certificate be made available to workers who have provided information to ACAS regarding their employment relationship dispute. UNISON’s view is that this will only assist in resolving employment relationship problems if this is more than a ‘tick box’ exercise and both parties are engaged in trying to resolve the dispute in good faith. This may mean, in order to create meaningful change, that further resources are made available to ACAS to facilitate more face-to-face conciliations between parties.

7. UNISON supports a free (no cost) and voluntary system of conciliation and understands that this is what is proposed under the Bill. It is important that all information prepared for the purposes of conciliation is without prejudice to the proceedings which is consistent with current ACAS practice. UNISON agrees with the TUC in their Briefing for the Second Reading of Bill dated 11th June 2012 and generally supports these proposals if they encourage earlier settlement of disputes. We agree that it is very important that workers are not barred from making an Employment Tribunal claim because they did not provide sufficient information to ACAS prior to filing a claim.

Reinstatement and Re-engagement (Clause 7)

8. Clause 7(9) states that in situations where a prospective claimant is no longer employed, the ACAS conciliator should seek to promote reinstatement and re-engagement as outcome of the conciliation or should seek to agree an amount of compensation when the prospective claimant does not want to be reinstated or re-engaged.

9. UNISON would welcome any steps towards encouraging reinstatement or re-engagement and we consider this should be the primary remedy awarded in any successful unfair dismissal case. As experienced representatives of workers, UNISON is aware that it is very rare to obtain an order of reinstatement or re-engagement from an Employment Tribunal and this is often because of the deterioration of the relationship between the employer and worker during the time between the end of employment and the remedy hearing. However, UNISON is concerned that conciliators may encourage reinstatement or re-engagement, but that this may be resisted by employers who may view the worker (unfairly) as a ‘trouble maker’ due to their exercising their legal right to raise an employment relationship dispute. UNISON would support further requirements on employers to actively consider re-engagement or re-instatement during conciliation in the subsequent regulations.

Impact on time limits for Employment Tribunal Complaints (Clause 8 & 9)

10. Employment Tribunal claims must be lodged in an Employment Tribunal within 3 months less one day of the relevant act. This is significantly shorter than the period in which other civil claims can be brought, for example, defamation claims must be brought within 12 months, personal injury claims must be brought within 3 years and breach of contract claims must be brought within 6 years. A longer limitation period results in a higher possibility that a claim may be able to be resolved between the parties without recourse to the Courts. Therefore, UNISON considers that it is essential that time limits for filing claims are extended to allow meaningful conciliation (as outlined in Schedule 2 of the Bill). UNISON agrees that during the conciliation period and prior to the lodging of any Employment Tribunal claim, that the limitation period should be effectively frozen so as to not discourage participation in conciliation or to disadvantage those who actively engage in conciliation.

Role for Legal Officers (Clause 10)

11. Currently, all employment disputes are determined by full employment tribunals or by an Employment Judge sitting alone. Legal officers can be appointed under the Employment Tribunal Act 1996 but can only determine cases where the parties have agreed the terms of the determination or the case has been withdrawn. To date, no legal officers have been appointed in the employment tribunal system.

12. Clause 10 states that legal officers should be able to determine specified types of claims where both the worker and the employer had consented in writing. The reason this Clause has been included in the Bill is because the government is exploring options for the ‘rapid resolution’ of more straight forward cases, including cases involving unfair deduction from wages, non-payment of the National Minimum Wage and holiday pay claims. The government is considering permitting legal officers to decide such cases if the parties agree in writing.

13. UNISON supports the principle of the rapid resolution of disputes. Often low paid workers wait for months or years to recover wages or holiday pay from employers. However, UNISON has some concerns with the proposal to permit legal officers to determine employment disputes. Legal officers do not receive the equivalent training to Employment Judges and may not be employment law specialists. Decisions made by a legal officer would have the same status as an employment tribunal decision and could only be appealed to the Employment Appeal Tribunal . Such appeals are complex and costly and the EAT cannot consider the merits of any ca se, only points of law. We are aware that legal organisations have raised the issue of whether using legal officers might contravene Article 6 on a fair trial of the European Convention on Human Rights. UNISON believes if legal officers are to determine some basic cases, it is essential that any decision can be reviewed by an Employment Judge or appealed to an employment tribunal.

Judges sitting alone in the Employment Appeal Tribunal (Clause 11)

14. Clause 11 proposes substantial changes to the composition of the Employment Appeal Tribunal (EAT) . EAT cases, as a rule, are determined by a panel comprised of a Judge and either two or four lay members, with an equal number of employer representatives and employee representatives. Where cases have been decided by a Judge sitting alone in an employment tribunal, any appeal will usually be heard by a Judge sitting alone in the EAT. EAT cases can also be determined by a panel of a Judge plus one or three lay members but only with the consent of the parties.

15. UNISON is firmly opposed to Clause 11 as it will significantly reduce the role for lay members in the Employment Appeal Tribunal and undermine the tripartite nature of the EAT. We do not agree that EAT cases should always be decided by a Judge sitting alone unless the Judge orders that employer and worker representatives should be involved. There is substantial evidence that lay members contribute significantly to the quality of decision-making in employment tribunals and the EAT, through their industrial relations experience. Such insights would be lost if Clause 11 is adopted.

16. UNISON experience of complex and large scale equal pay litigation involving tens of thousands of cases reinforces this view. Industrial relations experience is essential in these cases and without it UNISON believes that many EAT decisions made by Judges alone would have trig gered a further round of litigation because of misunderstandings of how negotiations between unions and employers on equality proofed pay systems work.

New powers to limit or increase compensation awards in unfair dismissal cases

17. Clause 12 of the Bill creates new powers for the Secretary of State to vary the limits for compensation awards in unfair dismissal cases. In 1999, the Labour Government increased the cap in unfair dismissal compensatory awards , after a long period of it falling in value, in unfair dismissal cases from £12,000 to £50,000. Since then the limit has been automatically increased in line with RPI and currently stands at £72,300. The current cap on basic awards in unfair dismissal cases is £12,900 .

18. The government is proposing to introduce a new power for the Secretary of State to limit (or potentially increase) the limit for compensatory awards in unfair dismissal cases by imposing a maximum of:

- b etween median annual earnings and three times median annual earnings (currently £26,000 and £78,000 respectively) or one year’s earnings or whichever is the lower of the above . Median annual earnings will be determined in line with the ONS Annual Survey of Hours and Earnings (ASHE).

19. This change has been included in the Bill even though it has not been consulted on and was not announced as part of the government’s response to the Resolving workplace disputes consultation .

20. UNISON does not support any reduction in the compensation levels which can be awarded in unfair dismissal cases. There is no justification for these proposals. According to Employment Tribunal and EAT Statistics for 2010/11 published by the M inistry o f J ustice , the median award for unfair dismissal was only £6,277. Any reduction in the limit for compensatory awards will reduce the incentive on employers to comply with basic unfair dismissal rights and to treat staff fairly. Reducing the limit will also mean that those on average or above average earnings will no longer be properly compensated for unlawful actions by their employer.

21. UNISON is also concerned by proposals permitting the Secretary of State to vary the level of awards depending on the type of employer, for example small businesses. Reducing compensation rights for staff in small businesses will mean that they will be treated as second class citizens. It may also mean that employees are more likely to bring discrimination claims against small businesses which are more complex and costly to defend.

Financial Penalties (Clause 13)

22. Clause 13 provides for a financial penalty sanction to be imposed on employers when they breach workers’ rights and when there are ‘aggravating features’. In principle, UNISON supports the concept of financial penalties for employers who flout workers’ rights because this may encourage compliance with the law.

23. It is proposed that these penalties will be for a minimum of £100 and a maximum of £5,000, but could then be reduced if payment is made within 21 days. UNISON does not consider that this level of penalty is high enough to provide a meaningful sanction to employers and encourage compliance with the law. UNISON considers that it should also be made clear that any contravention of workers’ rights is serious and reprehensible and avoiding a penalty is not necessarily recognition of lack of wrongdoing. Additionally, any sanction should be paid to the workers who were affected by the employer’s illegal action and not to the state.

24. UNISON does not agree that a financial penalty should not be imposed when there are recommendations made. Cases when recommendations are made will most likely be cases when an employer has either flouted workers’ rights or has not complied with the law.

25. UNISON’s experience is that Employment Tribunals generally act conservatively when awarding compensation to a successful Claimant and are concerned that the award of a penalty may indirectly reduce the amount of compensation received directly by the Claimant. UNISON would support regulations that prevent the reduction of compensation when a penalty is awarded.

Whistle- blowing : ‘public interest test’ (Clause 14)

26. The Employment Appeal decision of Parkins v Sodexho Ltd [2002] IRLR 109 raised the possibility that workers could use whistle-blowing rights to challenge changes to their contract of employment. Clause 14 may reflect that the Government considers that this was an unintended consequence of the legislation.

27. Clause 14 would alter the law in relation to whistle-blowing by not allowing protected disclosures unless the worker reasonably believed that it was in the public interest. UNISON is concerned that this proposal has not been subjected to public consultation and may not have been thought though because most workers would consider that disclosures that were capable of being covered by whistle-blowing rights would be made in the public interest.

Statutory redundancy pay: increases and decreases to limits (Clause 15)

28. UNISON is concerned that the change to the rounding process will slightly decrease the annual up-ratings of SRP but is pleased to note that the annual uprating remains linked to RPI not CPI.

Renaming ‘compromise agreements’ (Clause 16)

29. Clause 16 renames ‘compromise agreements’ (the legal agreements used to resolve employment disputes) as ‘settlement agreements’. This appears to be a minor change if this is the only alteration envisaged. However, UNISON would comment that the word ‘settlement’ appears to assume that there is already a problem or dispute to settle where ‘compromise’ suggests that there has been co-operation between the parties and a mutual agreeable outcome reached. UNISON notes that not all compromise agreements are currently used when the parties are in dispute, for example, voluntary redundancy situations.

Sunset clauses (Clause 49)

29. Clause 49 of the Bill makes it possible for Government Ministers to introduce ‘sunset clauses’ and ‘review provisions’ into primary or secondary legislation. A sunset clause provides that legislation will cease to have effect on a particular date. A review provision requires that legislation is reviewed at a particular time to ensure that it is still appropriate, necessary and that the aims of the legislation cannot be achieved by other means. UNISON does not agree that sunset clauses and review provisions should be used as a matter of course. While it is important to review and repeal moribund legislation, UNISON believes that when Parliament adopts legislation it does so to address significant economic or social needs. It is rare that such needs will be transient in nature. UNISON is also concerned that this power could be used to weaken or remove existing employment rights.

Equality and Human Rights Commission (Clause 51)

30. Clause 51 would change the functions of the Equality and Human Rights Commission (EHRC) by amending the Equality Act 2010.

31. UNISON agrees with the TUC in its stated opposition to these proposals to reform the EHRC’s statutory remit, to contract out its helpline, to stop its grants programme and slash its budget by 60%. UNISON is very concerned that these changes will seriously hamper the effectiveness and independence of the EHRC and further disadvantage those who have suffered discrimination.

Protected Conversations (Government amendments)

32. The Government have tabled amendments to the Bill seeking to have a protected space for employers to offer compromise agreements to employees without the offer being potentially used as evidence at a later Tribunal hearing. We believe that this can happen anyway where both parties agree to it and are pleased that the Government have not gone as far yet as legislating for employers to have ‘protected conversations’ with older workers about performance.

July 2012

Prepared 18th July 2012