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12 June 2013

Enterprise and Regulatory Reform Act 2013: June commencement

Our employment team outlines the provisions of the Enterprise and Regulatory Reform Act 2013 coming into force this month.

Whistleblowing amendments

On 25 June 2013, the main provisions of the ERR Act 2013 relating to whistleblowing take effect:

  • The key change in this area is that whistleblowing protection will be limited to those making disclosures which they reasonably believe to be “in the public interest”.  This is intended to close the loophole of individuals being entitled to claim whistleblowing protection in relation to alleged breaches of their own contract of employment (established in the case of Parkins v Sodexho Ltd, EAT [2001]).
  • The existing requirement for disclosures to be made “in good faith” will be removed from 25 June 2013, on the basis that it is no longer necessary as a result of the new public interest requirement.  However, where a tribunal considers that a disclosure was made in bad faith, it will have the power to reduce the amount of compensation awarded (if any) by up to 25%.
  • The introduction of personal liability for individual employees who victimise whistleblowers and vicarious liability for their employers.
  • The amendments also make minor changes to the definition of ‘worker’ for the purposes of whistleblowing protection, to include certain NHS contractors who would otherwise not be covered by the previous definition.

Miscellaneous amendments

Certain other provisions of the ERR Act 2013 also take effect on 25 June 2013:

  • Most hearings in the Employment Appeal Tribunal (EAT) will be heard by a judge sitting alone, unless the judge directs otherwise.
  • The two year qualifying period for unfair dismissal will be disapplied where the reason for the dismissal is (or relates to) the employee’s political opinions or affiliation.  This amendment is required as a result of the judgment by the European Court of Human Rights in the case of Redfearn v United Kingdom [2012].
  • The annual index-linked increase to the statutory week’s pay (for calculating statutory redundancy payments and basic awards) and tribunal compensation limits will take place on 6 April each year, rather than from a date in February as previously. They will continue to be based on RPI figures, but rounded up to the nearest £1 rather than the nearest £10.
  • The Secretary of State will have the power to vary the maximum compensatory award (in unfair dismissal claims), to either the national median wage or one year’s gross pay subject to an overall cap of the current maximum award (£74,200).  The Government has indicated that it will apply the one year’s gross pay option, subject to the existing limit of £74,200. It is likely that the statutory instrument required in order to exercise this power will come into force later this year (date to be confirmed).
  • The Secretary of State will have the power to broaden the ability of tribunals to make deposit orders and costs awards.  This power is likely to be exercised with effect from 29 July 2013 (the same date the new tribunal rules take effect).

Commencement of the remaining employment provisions under the ERR Act will take place either later this year or during 2014, with some of the remaining commencement dates yet to be confirmed.