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Pre-Election Employment Law Reforms

The end of May 2015 saw the introduction of a number of employment related reforms which were agreed by the previous coalition government.

The Small Business, Enterprise & Employment Act 2015 (SBEEA) introduced a number of changes on 26th May 2015, but these are the most notable for employers:- 

Zero Hours Contracts 

Section 153 of SBEEA introduces a new section to the Employment Rights Act 1996 (ERA) to give, for the first time, a legal definition of a zero hours contract (ZHC).  The new Section 27A defines a ZHC as “a contract of employment or other worker’s contract under which 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 there is no certainty that any such work or services will be made available to the worker”.  Put plainly, a ZHC is a contract under which a worker agrees to perform work if requested to do so by the employer, with there being no guarantee of work. 

The new Section 27A also outlaws any provision in the ZHC which prohibits the worker from doing work under another contract/arrangement, or which requires the worker to obtain permission from the employer before carrying out such other work.  Employers who use ZHCs within their business must therefore ensure that the contracts do not require the worker to work solely for the employer and/or require the worker to seek permission from the employer before undertaking work on behalf of another.  

This will not be the final word on ZHCs as Section 153 of SBEEA also introduced a further new section (Section 27B) to ERA providing the Secretary of State with the required powers to make further regulations with regard to zero hours workers.  

Financial Penalties for Failure to Pay Employment Tribunal Awards

Section 150 of SBEEA introduces a new (Section 37A) to the Employment Tribunals Act 1996 to govern the mechanism to penalise employers who fail to pay settlement awards or tribunal awards timeously.  

Fines for Non-Payment of National Minimum Wage 

Section 152 of SBEEA implements changes to Section 19A of the National Minimum Wage Act which revise the maximum penalty which can be imposed on an employer failing to pay at least the national minimum wage.  Previously the maximum fine (of £20,000) applied to each “underpayment notice”.  However, the revised section 19A will apply the cap in respect of each worker who is underpaid. 

Small and Micro Businesses 

Section 33 of SBEEA provides a new, clearer, definition of a small or micro business which may then be used to determine whether the increasing legislative exceptions for small or micro businesses, for example the consultation exception under the revised TUPE Regulations, will apply. 

A small business is now defined as an undertaking with a head count of staff of less than 50 (and which is not a micro business), and has a turnover or balance sheet total of an amount less than or equal to the “small business threshold”, which shall be prescribed by the Small & Micro Business Regulations.  A micro business is defined as an undertaking with a head count of less than 10 and a turnover or balance sheet total of an amount less than or equal to the “micro business threshold”. 

For more information please contact Martin Sinclair or Nicola Gray or call 01224 632464.

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