A closer look at the Enterprise and Regulatory Reform Bill - Part 2

Peninsula Team

April 12 2013

Power of employment tribunal to impose financial penalty on employers
The Bill proposes to grant tribunals the ability to fine an employer under certain circumstances. The fine is projected to be 50% of the award made to the employee, with a minimum £100 and maximum £5000. This imposition of a minimum means that if the award made is £75, the fine attached to it will be £100. If the employer makes payment within 21 days, the fine will be reduced by 50%.

Employers ‘who breach employment rights’ will potentially be faced with the fine where aggravating factors are present. An aggravating factor is at the discretion of the tribunal, however, this could include where malice was shown, where the organisation had a dedicated human resource team or where the employer had repeatedly breach the right in question.

Amendments to whistleblowing legislation

Restriction of whistleblowing protection to disclosures that are made ‘in the public interest’;
Currently a disclosure by the employee which relates to a ‘breach of a legal obligation’ by the employer falls within scope of the Act. The Bill proposes to introduce a requirement whereby, in order to attract protection, the disclosure made must be ‘in the public interest’.

If passed, this will address a current loophole where an employee can make a qualifying disclosure relating to a breach of his/her individual contract of employment. The Public Interest Disclosure Act 1998 was not intended to cover this situation which is arguably a private matter between employee and employer.

Removal of requirement that a protected disclosure be made ‘in good faith’, replaced with a tribunal power to reduce compensation if it was not made in good faith; Whilst the amendment above narrows the path for claimants, it will be widened again by the removal of the ‘good faith’ test. Claimants who wish to exercise the protection will no longer be required to satisfy this test. The tribunal will be given the power to consider whether the disclosure was made in good faith - if it can be seen that it wasn’t, the claimant may face a 25% decrease in their award. Arguably, this could open the floodgates for many self-interested automatically unfair dismissal claims to avoid the two year qualifying period. Alternatively some say that this may be used by the employee against an employer in trying to reach a higher settlement agreement.

Employer’s vicarious liability
Employers will be held liable for any detrimental treatment afforded from another member of staff to a whistleblowing employee. Previously the employer was only able to be held liable for unfair treatment carried out by themselves due to the protected disclosure, however, this will be widened. With this change, treatment carried out by a colleague will place the employer in the same position they would face if they had carried out the treatment themselves. An defence is available for employers who show they have taken all reasonable steps to prevent the detrimental treatment from happening.

For any further clarification, please call our 24 Hour Advice Service on 0844 892 2772.

By Nicola Mullineux

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