April 10, 2014

What SMEs Need to Know About the New Changes in Employment Law


A number of changes in employment law have now come into effect (April 6th). So, let’s discuss clearly what these changes are and what this could mean for your business. Over the last year we have seen many changes being pushed through and heralded as good news for SMEs in terms of reducing the amount of employment tribunals; however some changes can and inevitably will lead to increased costs.

What has changed already? (I’ve discussed these points in my original blog on my website here).

  1. Discrimination questionnaires are now abolished

    Discrimination questionnaires previously allowed employees to obtain information prior to lodging a Tribunal claim. A response from an employer was not obligatory, but a Tribunal could make adverse inferences if a claim was later brought in.

    The new system will be much more informal. Guidance is contained in a new ACAS publication, which encourages dialogue about a potential claim. 

  2. The ACAS ‘early’ conciliation process is introduced

    This has been introduced on a voluntary basis, with it becoming mandatory a month later. This is potentially one of the most influential changes this Spring.

    ACAS already has the power to intervene in an employment dispute once a Tribunal claim has been made, and has for a number of years ran a successful voluntary pre claim conciliation service (with independent research showing the average cost of settlement to be £475 compared to £3700 in an Employment Tribunal) allowing employee or employer to ask for ACAS assistance before lodging a claim.

    Working with ACAS is nearly always a sensible idea, although in the past you’ve usually had to do it before you’ve taken legal advice.  One of the main advantages is that the ACAS conciliator can broker a settlement without the legal costs involved in a ‘settlement (previously compromise) agreement’.

    From 06 May 2014 onwards, a claimant will have to give details of their potential claim to ACAS, a conciliation officer will be appointed, and he/she will have a month to attempt to promote a settlement. After this (and before if one or more parties withdraw), without a settlement, and armed with a certificate to that effect, the claimant can pursue a Tribunal claim.

    Employers will need to be ready to deal with this new type of approach, particularly when the it comes ‘out of the blue’ – see these 10 tips.

  3. Tribunals will be able to impose financial penalties

    This will mean that employers who lose a Tribunal claim with ‘aggravating’ (sorry, we don’t really know what that means yet until we have some case law!) features. Up to £5000 may be payable to the Secretary of State (this is a fine not compensation to the employee) where, for instance, there has been negligence or malice.

  4. Changes to Statutory Sick Pay

    Employers will have a new freedom to keep statutory sick pay records in a manner which suits them. The Percentage Threshold Scheme (PTS) that allows employers to claim some of their SSP payments back from HMRC is also abolished in order to encourage employers to deal with high levels of absenteeism, and to pay for a new occupational health service that we expect to see in 2015.

  5. Tribunal Claims are being reclassified

    A bit of a technical one this – here for completeness! A range of Tribunal claims are being reclassified from the lower Type A fee banding (£160 issue fee and £230 hearing fee to the higher Type B category, £250 and £950). These include equal pay, sex equality in pension schemes, failure to inform or consult under TUPE, failure to allow compensatory rest under the Working Time Regulations 1998 and breach of the right to request time off for training.


    In order to fulfil the pension matching requirements under TUPE, the transferee (the new employer) will now have the choice of matching the employee’s contribution up to 6%, or at least matching the previous employer’s contribution up to 6%.

  7. SMP and SSP
    Statutory maternity pay (SMP) increases to £138.18, and statutory sick pay (SSP) goes to £87.55.

What’s coming up in the rest of the year (implementation date)?

  1. The period for providing ‘employee liability information’ under TUPE gets extended from 14 to 28 days – see my previous blog (01 May 2014).

  2. The right to make a flexible working request will be extended to all employees with 26 weeks’ service (30 June 2013). Under the present arrangements (pick up our free Guide to Parental Rights), carers or parents with children under 17 (18 if disabled) have the right to make a request for flexible working.

    Many employers already allow all employees to make such requests, which are usually considered under the terms of an internal procedure which reflects the statutory requirements (with certain timescales) for those groups that have the legal right.

    The main thing to note is that although the current timescales for responding, making decisions, and handling an appeal will no longer apply, there will still be a basic requirement that requests should be concluded within three months.

    One of the benefits of the new regime will be that trial periods will be easier to arrange.

  3. Micro businesses (10 or less employees, or is it less than 10, the government cannot make up its mind as to what a micro business is!) will be able to undertakedirect consultation with employees in a TUPE situation – there will be no need to try and organise elected representatives (31 July 2014). Worth remembering this if you are considering being involved in a TUPE transfer where there is the opportunity to delay the transfer until the 31 July or later.

  4. Fathers and partners will be able to take unpaid time off (up to 6.5 hours) for up totwo antenatal appointments (01 October 2014).

  5. The annual changes to the national minimum wage (NMW) take effect (01 October 2014) – the standard adult rate will become £6.50.

So, there we have it, the year’s employment law in a nutshell. What, if anything will affect your business the most?


More from Vistage:


Subscribe to the blog

Our gift to you...

Apply now for your personal leadership consultation with a Vistage Chair. They'll help you assess areas of strength of your business and identify areas of potential growth.

Apply Now

    Subscribe Here!