Employment Tribunal Reform: The Enterprise and Regulatory Reform Bill

In the midst of the recent controversy surrounding the now infamous Beecroft report, Business Secretary Vince Cable has presented the Enterprise and Regulatory Reform Bill to Parliament.

The Bill aims to introduce legislation that will, amongst other things, apparently improve the Employment Tribunal system by encouraging parties to settle their disputes before initiating an Employment Tribunal claim. The Bill also aims to make the determination of less complex disputes quicker and cheaper for employers and employees alike, through a new “Rapid Resolution” scheme. Subject to the will of Parliament, these objectives will be achieved by:

• introducing a mandatory period of Acas conciliation before Tribunal proceedings can be initiated;
• extending the limitation periods within which claims can be brought, so that pre-issue Acas conciliation can take place;
• affording the Secretary of State the power to cap unfair dismissal compensatory awards to a maximum between the national median earnings and three times the national median earnings or, in the alternative, to limit awards to one year’s earnings;
• allowing Employment Tribunals to impose a penalty on employers of 50% of any financial award where there are aggravating features; and
• permitting Employment Appeal Tribunal cases to be heard by one Judge alone, unless ordered otherwise.

The Bill also provides for the renaming of “compromise agreements” (to become “settlement agreements”), and the limitation of the definition of “qualifying disclosure” in the context of whistleblowing legislation so that disclosures are not protected unless believed to be made in the public interest. At a guess, this could rule out an employee seeking protection as a “whistleblower” if her only protected disclosure has been to say her employer is in breach of its legal obligations to her.

Following recent heated exchanges during Prime Minister’s Questions (during which Labour leader Ed Miliband condemned Prime Minister David Cameron’s alleged backing of the Beecroft report’s proposal for “no-fault dismissal”), the Coalition Government will no doubt hope that the Bill will quieten the criticism it has faced in recent weeks following accusations of “doctored” reports, perceived in-fighting and controversial proposals in respect of employment law reform.

Whistleblowing Partners

An LLP equity partner can be a worker and have protection in a whistleblowing situation, held the Employment Appeal Tribunal (EAT) in the case of Bates van Winkelhof v. Clyde & Co LLP and Morris.

The Claimant made a report to Clyde & Co’s money laundering officers that someone with whom she worked under a joint venture arrangement in Tanzania had admitted to her that he paid bribes to secure work and to secure the outcome of cases. This allegation was denied by Clyde & Co, but formed the basis of the Claimant’s whistleblowing claim.

When the Claimant was expelled from the partnership, she alleged that it was a detriment on the grounds she had made protected disclosures. She also alleged that the expulsion amounted to sex discrimination on the basis that a male partner would not have been treated in that way and/or it was pregnancy-related as she had recently informed the firm that she was pregnant. The partnership denied her claims.

Sex discrimination legislation expressly extends to partners, but to bring a whistleblowing claim the Claimant needed to have employee or worker status. She accepted that she was not an employee, but was she a worker?

The EAT said that she was a worker as defined under the Employment Rights Act 1996. Therefore, she could claim protection against suffering a detriment if she had genuinely blown the whistle and was expelled because of it. A Tribunal will now have to consider whether her various claims are well-founded.

Ms Bates van Winkelhof was not a full equity partner. Although she enjoyed a profit-related element in her pay, she was also guaranteed a certain level of remuneration. It is not clear whether a full equity partner would also be classed as a worker. It is also unclear what level of compensation she will receive for her detriment claim.

Partnerships should bear in mind the increased risk of whistleblowing claims from their partners and relevant policies and decisions should take this risk into account. They should also note that worker status is a passport to other protections, such as the right not to suffer unlawful deductions from wages, working time rights and the right to be accompanied at certain meetings.

This e-bulletin has been drafted on ESP’s behalf by Manches LLP Solicitors. Manches LLP are one of ESP’s strategic legal advisory partners and provide certain services to our clients through a range of different Legal and HR support services offered by ourselves to the Corporate market.

The content of this article does not constitute legal advice and it should not be relied upon. Specific legal advice may be required to address your specific circumstance.