Changes for 2013

It has been a busy start to the year with many developments around changes first proposed last year.

Collective consultation

In December, consultation regarding changes to the collective redundancy consultation laws concluded that the 90 day period will be reduced to 45 days.  Draft regulations have recently been released.  Currently employers are obliged to allow for a 90 day minimum consultation period where they are proposing to make redundant 100 or more employees at one establishment.  The Government believes that, by reducing the days, this will give businesses the flexibility to respond to changing market conditions and to restructure more effectively.  It is also thought that a shorter period will mean the employee uncertainty is not unnecessarily prolonged.  The new rules take effect from 6 April 2013.  The minimum 30 day period for employers proposing to make redundant 20 or more but less than 100 redundancies at one establishment remains the same.  Acas have been tasked to give non-statutory guidance to help identify what is ‘an establishment’.  The changes will also provide that the expiry (but not the early termination) of a fixed term contract will be excluded from the ambit of the law.

Compensation limits from 1 February 2013

The following changes took effect on 1 February 2013:

•  the limit of a week’s pay for the purpose of calculating statutory redundancy payments and the basic award for unfair dismissals increased from £430 to £450; and
•  the maximum compensatory award for unfair dismissal rose from £72,300 to £74,200.

Employee shareholder consultation

Shortly before Christmas the Government responded to its consultation on employee shareholders which allows for employees to give up some employment rights in return for shares.  Despite 92% of respondents to the consultation viewing the plans in a negative or mixed way the Government still intends to implement the policy.  The only change it has made is to change the name from “employee owners” to “employee shareholders.”

The plan is for employers to offer prospective employees ownership of between £2,000 to £50,000 worth shares in the company (or parent company) in return for certain employment rights (e.g. normal unfair dismissal and redundancy rights) to be waived.  Employers will be free to offer prospective employee’s ownership of shares on a ‘take it or leave it’ basis.  That is to say that there appears to be no obligation on employers to offer an alternative to this basis (i.e. a normal employment contract) if the employer does not wish to do this.

The Government has committed to ensure there is clear guidance about the new status for companies and individuals which will to come into force in April 2013.

With questions in a number of areas the legislation is likely to be a damp squib and not fulfil the brief originally set.  Its take up is likely to be limited.

As a result of other consultations the Department for Business, Innovation & Skills has announced/confirmed legislation will be introduced to:

1. impose a cap on the unfair dismissal compensatory award of twelve months’ pay or the statutory maximum (currently £74,200) whichever is the lesser (expected Summer 2013);
2. amending TUPE, to remove service provision changes from the definition of a transfer, repeal Employee Liability Information provisions, and making various other amendments; and
3. establish a health and work assessment and advisory service (2014 onwards).  This will provide a state-funded assessment by occupational health professionals for employees who have been on sick leave for four weeks to:

a) ‘signpost’ appropriate interventions;

b) provide employers and employees with advice on overcoming barriers to a return to work; and

c) provide case management for the minority of employees with complex needs who require ongoing support to enable their return to work.

We can also expect more detail to emerge about the government’s plans to require early conciliation through Acas on most tribunal claims.  The intention is to have early conciliation to settle claims before getting into the tribunal system.

Watch this space or for more detail.

For more information, help or advice please contact Tim Davies on 0191 211 7927 or email [email protected].