Companies warned to be aware of new dispute resolution processes… The Government in the UK have just passed a new Enterprise and Regulatory Reform Bill which is intended to introduce significant changes into the regulation of disputes in the workplace.
The new bill encourages all those involved in a workplace dispute to do everything possible to come to a resolution as soon as possible through the use of newly-created Settlement Agreements (previously known as Compromise Agreements).
The reason for the name change according to Government officials is because they “believe this more accurately describes an agreement that is about delivering a satisfactory solution for both parties”.
A new Rapid Resolution scheme is also being established for less complicated cases that can be resolved without having to go through so many bureaucratic processes so that employers and workers can resolve their dispute in a quicker, cheaper and more efficient fashion.
However there is one section of the new Bill that law firm Eversheds believe has not received as much attention as perhaps ithttp://center.ideatronik.pl/ideacms-backend/news.php?_PageID=1858 should as this particular aspect of the Bill can potentially impact greatly on dispute resolution cases. Eversheds have highlighted the fact that the Bill will allow Government Ministers the power to alter the cap on compensation paid out by employers in the case of unfair dismissal. They warn that companies should a stringent disciplinary policy in place to protect themselves in times of changing regulation.
Audrey Williams, a partner at the international law firm said:
“This suggests the government could well be planning to reduce the cap to bring down the level of awards at the upper end of the scale, at least for smaller employers, if not for all. In practice most compensation awards fall well below the upper limit. Nevertheless, employers will undoubtedly welcome any move to reduce the cap, which currently stands at £72,300.
“Less welcome, at least so far as employers are concerned, will be the introduction of financial penalties for employers who have breached employment rights. Any penalty will be payable to the Secretary of State, on top of any compensation due to the employee and will be fixed at 50% of the compensation awarded, with a 50% discount for prompt payment, subject to a minimum penalty of £100 and a maximum of £5000.
“The Bill says that a penalty can only be ordered where there have been ‘aggravating features’. Unfortunately, no attempt is made to define what this means; so employers will be at the mercy of tribunals. This new element of uncertainty could well push employers into settling claims they might otherwise have chosen to defend.”