April 17, 2014

Employment update: Financial penalties for employers and other spring changes

Looking ahead

• For claims issued after 6 April, tribunals will be able to order a losing employer to pay a financial penalty to the Secretary of State, in addition to any compensation payable to the employee. The tribunal will have this discretion when it finds that an employer has breached a worker’s rights and there is an “aggravating feature”. It is not clear what will amount to an aggravating feature. Guidance suggests that the tribunal may be more likely to make an award where (i) the action was deliberate or done with malice, (ii) the employer had a dedicated HR team, and/or (iii) the employer repeatedly breached the employment right. The tribunal may be less likely to make an award if the employer (i) is a new business, (ii) is a very small organisation, (iii) has a limited HR resource, or (iv) made a genuine mistake in committing the breach.

If a financial penalty is ordered then it will be equal to 50% of the compensation payable to the employee, subject to a minimum of £100 and a maximum of £5,000. If the employer pays the penalty within 21 days then it only needs to pay 50% of the penalty.

• The cap on the compensatory award for unfair dismissal has increased from £74,200 to £76,574. As a reminder, the cap is the lower of (i) £76,574 and (ii) the employee’s gross annual salary.

• Increases in statutory rates and payments from 6 April: cap on a week’s pay for the purposes of calculating statutory redundancy payments or basic awards, statutory sick pay and statutory maternity, paternity and adoption pay.

• As part of the government’s Red Tape Challenge, statutory discrimination questionnaires have been scrapped from 6 April. New ACAS guidance on how employers should now deal with questions relating to discrimination replaces the statutory questionnaires. The tribunal will be able to look at an employer’s answers (or failures to answer) as a contributory factor in making its decision on the employee’s discrimination claim.

• From 6 April, there is a change to the pension protection that applies on a TUPE transfer. The new employer now has the option of matching the old employer’s employee pension contributions as an alternative to the old requirement to match the employee’s chosen contribution (up to 6%).

• Before a TUPE transfer, the old employer must provide certain information (“employee liability information”) to the new employer. For transfers happening from 1 May 2014, this employee liability information will need to be provided at least 28 days before the transfer, an increase from the 14 days required for transfers before 1 May.

Our Employment & HR team specialises in working closely with business owners and HR professionals on all aspects of employment law, including policies and procedures, remuneration and benefit issues, avoiding discrimination issues, as well as disciplinary/dismissal procedures and employment tribunals.

For more information and advice on any of the above changes, or any other employment law or HR matter, please get in touch with members of our Employment & HR Team.

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