Employment Alert No. 117: New Legislation coming into force on 6 April 2006
March 31, 2006
| What legislation is coming into force? |
It’s that time of year again. In keeping with the Government’s promise to introduce new employment legislation on two dates only each year (6 April and 1 October), Thursday 6 April 2006 will see the introduction of the following:
- Transfer of Undertakings (Protection of Employment) Regulations 2006 – the new TUPE Regulations;
- Working Time (Amendment) Regulations 2006;
- Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006;
- Information and Consultation of Employees (Amendment) Regulations 2006;
- Code of Practice on Racial Equality in Employment.
The following changes were also made by The Employment Rights (Increase of Limits) Order 2005 which adjusted the compensation limits with effect from 1 February 2006:
- The maximum compensatory award for unfair dismissal has been increased to £58,400 and the maximum amount of "a week's pay" for the purpose of calculating a statutory redundancy payment or for various awards, including the basic or additional award of compensation for unfair dismissal, is increased to £290.
| What are the key changes? |
- The aim is to introduce clarity into this area by drawing together various principles developed by case law over the years;
- They apply to any transfer that takes effect on or after 6 April 2006;
- There is an additional definition of a “relevant transfer” encompassing a “service provision change” which includes contracting out, contracting in and re-tendering activities;
- They provide clarification when contractual variations in connection with a TUPE transfer will be permitted (i.e. if the changes are made for a reason unconnected with the transfer or they are connected with the transfer and the sole or principal reason for the agreed variation is an economic, technical or organisational reason entailing changes in the workforce (ETO reason)). Otherwise the change will be void;
- They also seek to provide clarity on TUPE related dismissals. A dismissal for which the sole or principal reason is a reason connected with the transfer AND which is an ETO reason will be potentially fair subject to the normal unfair dismissal provisions (including the obligation to comply with the statutory dismissal procedures unless collective redundancy consultation replaces that obligation). A dismissal unconnected with the transfer is potentially fair provided the statutory dismissal procedures are followed (subject to the exemption where collective consultation applies for redundancies of 20 or more). Employers must still act reasonably as they do with any dismissal;
- They introduce a statutory duty on the transferor to provide to the transferee specified information about the transferring employees (including the identity and age of the employees and details of their terms and conditions of employment). The information must be accurate and up to date, being no older than 14 days before the date it is passed to the transferee. The information must be kept up to date throughout. In most cases information must be passed across not less than 14 days before the transfer. The penalty for failing to comply with this requirement is an award of not less than £500 per employee in respect of whom the duty to provide information arose. This will be particularly helpful to second and third generation outsourcing contractors, to ensure they are better informed before they take over the contract;
- Both the transferor and transferee can be joint and severally liable for any compensation awarded for failing to inform and consult.
| What legislation is coming into force? |
Working Time (Amendment) Regulations 2006
At present where workers have part of their working time pre-determined by their contract but also voluntarily work longer hours, their additional voluntary hours are disregarded for the purposes of certain of the protections under the Working Time Regulations (WTR) (e.g. restrictions on weekly working time and night working do not apply). The regulation which provides this derogation will be repealed with effect from 6 April 2006. Post 6 April the derogation from the WTR will only apply where the whole of a worker’s working time (not just part) is not measured or predetermined, (i.e. this usually only applies to very senior employees). The WTR “opt out” will continue to be needed for other employees.
Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006
Businesses employing more than 150 employees (this threshold will reduce to 100 in 2007 and 50 in 2008) must consult with employees before making any changes to occupational or personal pension schemes. Employers do not need to consult under these Regulations if they already consult under a collective agreement or under the Information and Consultation Regulations 2004 (I&CR).
Information and Consultation of Employees (Amendment) Regulations 2006
These amending Regulations are necessary to remove the overlap between the I&CR and the Pension Regulations above. An employer does not need to consult under the I&CR if it already has the duty to consult under the Pension Regulations.
Code of Practice on Racial Equality in Employment
This is the first update of the Code by the Commission for Racial Equality since 1982. It provides advice on developing policies and will be relevant in Tribunal proceedings as the benchmark by which to assess an employer’s behaviour from 6 April 2006 onwards.
MWE Age Discrimination Seminar
As you will no doubt be aware, the new Employment Equality (Age) Regulations 2006 come into force on 1 October 2006. We are currently working with many of our clients to advise them on the impact of these Regulations. As part of our on going seminar programme we held a seminar on the new Age Regulations on 29 March 2006. Those clients, who were unable to attend but who would like to receive a copy of the seminar handout, should please email Dawn Church on dchurch@europe.mwe.com with their contact details.
