Enterprise and Regulatory Reform Bill is implemented

The Enterprise and Regulatory Reform Bill, among other things, implements various reforms to the employment tribunal system; permits employers to have a "protected conversation" with an employee with a view to terminating his or her employment under a settlement agreement; and allows the Secretary of State to change the limit on the unfair dismissal compensatory award. 

Employment tribunal reform: The Enterprise and Regulatory Reform Bill implements the following changes to the employment tribunal system. The Bill:

  • requires prospective claimants in an employment dispute to send prescribed information to Acas for it to attempt a settlement, before lodging their claim;
  • allows for certain employment tribunal claims to be heard by legal officers (who will be appointed in accordance with regulations) if the parties agree;
  • changes the Employment Appeal Tribunal (EAT) rules so that appeals to the EAT will be heard by a judge sitting alone, unless a judge directs otherwise;
  • introduces a power for employment tribunals to order employers that have breached workers' rights to pay a financial penalty (to the Secretary of State) of between £100 and £5,000 where there are "aggravating features", the penalty being, in most cases, 50% of the amount of any award that the tribunal has made against the employer; and
  • renames compromise agreements "settlement agreements". 

The Enterprise and Regulatory Reform Bill also implements the changes set out below. 

  • Protected conversations: The Bill will insert a new section into the Employment Rights Act 1996 to provide that: "Evidence of pre-termination negotiations is inadmissible in any proceedings on a complaint under s.111 [that an employee has been unfairly dismissed by his or her employer]". "Pre-termination negotiations" are defined as "any offer made or discussions held, before the termination of the employment...with a view to it being terminated on terms agreed between the employer and the employee". In effect, the provision allows an employer to hold a discussion with an employee with a view to terminating his or her employment under a settlement agreement, without the employee being able to rely on the details of the conversation as evidence in an unfair dismissal claim. It goes further than the "without prejudice" principle, as it applies even where no formal dispute has yet arisen. The provision is limited to ordinary unfair dismissal claims only; it does not apply to automatically unfair dismissals. Employers will not be able to rely on a discussion being protected where the employee claims discrimination, or any other type of complaint. 
  • Unfair dismissal compensation limits: The Bill will give the Secretary of State the power to change, by order, the limit on the amount of the unfair dismissal compensatory award to median annual earnings, three times median annual earnings or 52 times the week's pay of the claimant concerned. 
  • Equal pay audits: The Bill will insert a new section into the Equality Act 2010 that will provide for regulations to require employment tribunals to order an employer to carry out an equal pay audit if it has committed an equal pay breach. 
  • Health and safety: The Bill will amend the Health and Safety at Work etc Act 1974 to provide that the breach of a statutory duty imposed by health and safety regulations shall not be actionable except to the extent specified in regulations made under s.47 of the Act (at present such breaches are actionable in respect of damage caused unless the relevant regulations provide otherwise). 


XpertHR legal timetable and HR calendar Keep up to date with new legislation, consultations and HR developments in 2012 with XpertHR's legal timetable and HR calendar. 

The XpertHR employment law manual explains the current law on tribunal procedures and penalties, unfair dismissal and equal pay

Policy on dealing with harassment complaints Use this model policy to give employees who believe that they have been harassed or bullied at work a route to raise a complaint either informally or formally.