Legal update: Small Business, Enterprise and Employment Bill: Employment aspects

30 July 2014

The publication of the Small Business, Enterprise and Employment Bill on 25 June 2014 has attracted substantial publicity and contains important points for both employers and employees to note. The main areas of media focus are the proposals which effectively ban the use of exclusivity clauses in Zero Hours Contracts, but the Bill covers a wide range of employment issues, which we examine below.

National minimum wage – hefty penalties

Notably, it is clear from the Bill that rogue employers who underpay their workers may pay a heavy price. The Bill makes provision for the maximum £20,000 penalty to apply in respect of each underpaid worker, rather than per notice.

Company directors

The Bill also aims to increase transparency around the control of UK companies. There will be a prohibition on the appointment of corporate directors. Companies will also be obliged to keep a public register of people with “significant control” over the company. General directors’ duties will be widened to apply to shadow directors (where possible) and the time for making a court application for the disqualification of an unfit director of an insolvent company will be increased from 2 – 3 years.

Public sector exit payments

Unsurprisingly, given cuts in the public sector over recent years, and resulting public discontent, the Bill makes provision for public sector employees to repay exit payments in certain circumstances. It is not clear how this will work in practice as the bill provides for the Treasury to make regulations to enforce the repayment of these exit payments. Questions are being asked as to whether the regulations will be wide enough to include ex-employees of the public sector who return as consultants.

Enforcement of tribunal awards and settlements

Currently only about 50% of all employment tribunal claimants who are successful at tribunal actually receive their tribunal awards. A new financial penalty will be introduced for respondents that fail to pay on time. This is particularly welcome given that claimants are now incurring fees to bring their case to an employment tribunal and it is only right that claimants have a legitimate expectation that an award will be paid if they are successful.

Postponement of tribunal hearings

The number of postponements or adjournments for which a party can apply will be limited. Tribunals will also be required to consider making an order for costs against a party who makes a late application to adjourn a hearing. The definition of “late application” will be dealt with in secondary legislation.

Zero hours contracts

The subject of much political debate, the Bill proposes a statutory definition of zero hours contracts (at the moment, there is no such definition) and that exclusivity clauses in zero hours contracts should be rendered unenforceable. 83% of respondents to the government’s consultation on zero hours contracts supported a ban on exclusivity clauses and this, in addition to considerable pressure from Trade Unions, has clearly prompted the proposed changes outlined in the bill.

The proposals of the bill will apply to all existing and future zero hours contracts from the commencement of the Act. The definition of zero hours contracts offered in the bill is as follows:

"A contract of employment or other worker's contract under which (a) the undertaking to do or perform work or services is an undertaking to do so conditionally on the employer making work or services available to the worker, and (b) there is no certainty that any such work or services will be made available to the worker. For this purpose, an employer makes work or services available to a worker if the employer requests or requires the worker to do the work or perform the services".

The phrase “no certainty of work” is an ambiguous term and it would seem that satellite litigation is probable.

The government has announced that it will undergo further consultation processes to ensure that it is not possible to evade the exclusivity ban (for example, by using one hour fixed contracts).

Whistleblowing: protected disclosure reporting requirements

The Bill seeks to provide greater reassurance to the whistle-blower that action is being taken by the prescribed person. This is a welcome step given that research by the University of Greenwich and Public Concern at Work shows that currently 75% of whistleblowers say that nothing is done about the wrongdoing they report.  Prescribed persons will be required to report annually on the whistleblowing disclosures they receive. This will be done on a basis which does not identify the workers or employers concerned.

Share insightLinkedIn Twitter Facebook Email to a friend Print

Email this page to a friend

We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.

Leave a comment

You may also be interested in:

Skip to content Home About Us Insights Services Contact Accessibility