Employment Law Update – January 2016

During January, several new pieces of legislation have been announced which employers need to be aware of.

Here is a round-up of the important changes.

Zero Hour Contracts

In force from 11th January 2016 is the The Exclusivity Terms in Zero Hour Contracts (Redress) Regulations 2015.

The dismissal of an employee with a zero-hour contract is now automatically considered to be unfair, if the main reason for dismissal is that the employee breached a clause in their contract preventing them working for another employer. There is no qualifying period for making such a claim.

It is also unlawful to submit a zero hour worker to detriments, if they work for another employer in breach of any contractual clauses stopping them from doing so. Please note that the legislation uses the term “worker”, distinct from “employee”.

Penalty Notices For Unpaid Employment Tribunal Awards and Settlements

The Government has announced that from April, it intends to introduce penalties for employers who have not paid Employment Tribunal Awards.

This will be unwelcome news companies who attempt to avoid paying Claimants. According to government statistics, 39% of all Employment Tribunal awards go unpaid. 50% of payments of over £5,000 are unpaid. Currently, 10% of large employers are refusing to pay awards.

These figures are quite alarming for Tribunal Claimants, and the aim of the new penalty system is to reduce the number of outstanding awards owed by employers.

The penalty will be 50% of the amount owed by the employer, subject to a minimum of £100, and a maximum of £5,000.

In a similar way to parking fines, the penalty will be reduced by 50% if the employer pays the amount owed to the employee and the relevant penalty within 14 days of receiving a demand for payment. It is important to note that the Government will be acting unilaterally in any enforcement action. The process commences without any action required from the Claimant. Any penalties recovered will be paid to The Secretary of State, and not the Claimant.

If after the award remains unpaid by the employer after receipt of a Penalty Notice, normal enforcement action will be taken (as could be in a County Court claim) and the outstanding sums may also be subject to interest.

The new penalties are additional to the Employment Tribunal’s power to impose financial penalties on employers found to have breached a Claimant’s rights. This is where it is found that “aggravating features” exist. However, it is interesting that this power has been used very little in practice since its introduction in April 2014.

About the author

Amy Hallam is a director and Head of Employment Law at BRM.

For more advice on this topic or related matters:

01246 564012 amy.hallam@brmlaw.co.uk