Our thoughts on the world of employment law - and beyond.

Small Business, Enterprise and Employment Bill

Heralded in the Queen's Speech 2014 earlier this month, The Small Business, Enterprise and Employment Bill ('SBEEB') was published yesterday.

The Government describes the long-term aim of this legislation as 'essentially to build a stronger economy and improve the general climate in which small businesses operate.' Alongside the array of small-business-specific regulations covering revised company incorporation, filling and directorship transparency, simplified access to finance and a 'modernising' of insolvency practice, come those expected provisions on the current hot topics of employment law.


Shouting for the individual worker

The SBEEB makes exclusivity clauses in zero hours contracts unenforceable. The intention is to outlaw the apparent abuse of the stronger employer position in the employment market by ensuring that no individual can be tied to a contract without any guarantee of paid work.

It is questionable whether this new provision will have any real impact, however. Aside from the tricky issue of defining the amorphous 'zero-hours contract' in the first place (there's a definition proposed as an amendment to the Employment Rights Act which really doesn't seem to work); there is no solid evidence to what extent exclusivity clauses in fact dictate workers' freedom in practice. In all probability the headlines are effectively shouting about unspoken rules in the use of zero hours contracts rather than strict contractual exclusivity.  There is a lot of political capital being made here out of something that in reality is of doubtful relevance, and certainly a sideshow to the main event of zero hours contracts versus employment rights.

Making exclusivity clauses void will essentially mean that an employer would no longer be able to sue a zero hours worker for working for somebody else. What real difference in practice, though, if that employer can simply deny the worker future work instead? The SBEEB does retain the power for the Secretary of State to make further provisions in relation to zero-hours workers (in particular conferring rights on them) so the debate looks set to continue and zero-hours workers may yet acquire some more concrete rights.

The SBEEB also introduces a framework for the reform of whistleblowing legislation; requiring prescribed persons to publish in an annual report details of disclosures made to them (this is to be subject to detailed secondary legislation). This reform should achieve a consistent standard of best practice in handling disclosures; providing greater reassurance to the whistle blower that action is being taken and resulting in greater confidence in the prescribed person.

In further support of individuals, the SBEEB will increase the penalties imposed on employers which underpay in breach of the national minimum wage legislation. The Government has already increased the penalty percentage from 50% of total underpayments to 100% (and has also increased the maximum penalty up to £20,000 by secondary legislation); but this new provision will apply the maximum penalty on a per worker basis rather than per notice.


Strict powers of enforcement

The SBEEB provides that the employment tribunal procedural rules may include provisions for limiting the number of successful applications for postponement of a hearing available to the parties. This is to be coupled with an obligation on the tribunal judge to consider making a costs award if it receives a late postponement application (the concept of what constitutes a 'late postponement' is to be set out in secondary legislation). It is hoped that these new measures will reduce the delays in the employment tribunal system caused by frequent and short notice postponements.  Again, this is not something which had been hugely high on the hit list of employment lawyers' gripes and on the face of it seems a slightly odd thing to have prioritised (not least since many of the last minute postponements we've seen over the last few years have come about by reason of the absence of a judge, rather than the conduct of the other side).

There will also be a new system for enforcing tribunal awards; deterring non-compliance and delivering 'strong financial consequences' for non-payment. If a tribunal award remains unpaid, an 'enforcement officer' will give a 28-day warning notice. If the monies are not then paid by the Respondent, a 'penalty notice' will be issued, with the penalty sum being 50% of the outstanding amount (subject to a minimum of £100 and a maximum of £5,000). If the full sum, together with the penalty, are then paid within 14 days, the penalty is reduced by 50%. This penalty is payable to the Secretary of State, not the Claimant.

The Treasury will have new powers to claw back a termination payment paid in certain public sector exits – the detail is spectacularly unclear as yet, but the main thrust appears to cover situations where a high earner leaves a public sector role and then returns to a role (including, interestingly, a consultancy role) in the same part of the sector within a short period of time.


The ends of the education spectrum

The SBEEB additionally looks at governance of the start and end of education. New provisions will reduce some bureaucratic burden on schools by removing the requirement to register separately with Ofsted in order to provide education to two-year-olds. This has already been effected for the provision of education to three and four-year-olds.

Finally, it might be interesting to note that the new Bill is to introduce measures 'to provide new and improved information on learning outcomes by tracking students through education into the labour market'. BIS claims that the purpose is to 'allow us to share, at student level, information on the destinations of former students with colleges in England and Wales'.

The sharing of this data will provide evidence of which institutions best enable their students to progress to positive, sustainable employment destinations, so informing student choices and acting as a means of incentivisation and accountability.

Overall, the employment-related aspects of the Bill are quite short on detail.  A lot seems to be left to secondary legislation (aka – we'll sort out the meat of it later once we've figured it out); an increasing (and irritating) trend in employment regulation over the last few years.  It is hard to escape the conclusion that much of it is geared at headline-grabbing, with implementation languishing in the post-election abyss.

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