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March 2013 Updates

Government consultation on Tribunal rules

The former President of the Employment Appeal Tribunal, Mr Justice Underhill, recently undertook a fundamental review of the Employment Tribunal Rules of Procedure. He recommended that, rather than being amended, the existing rules should be redrafted from scratch in a more accessible way. The Government's response to the review indicates that new rules will be adopted, which will take on board the following:

  • Where a Claimant withdraws their claim, it may automatically be formally dismissed by the Tribunal. This means that the employer would no longer have to formally request that the Tribunal dismiss the claim.
  • Interest will start to accrue on a Tribunal award from the date of the judgment, as opposed to after a deferred waiting period. However, if the award is made within 14 days, the interest will not be payable.
  • The introduction of an initial sift stage for all Tribunal claims. This will allow Tribunals to reject claims which they do not have the jurisdiction to hear, that cannot be sensibly responded to and/or that are an abuse of the Tribunal process.
  • Case Management Discussions and Pre-Hearing Reviews will be combined into a single preliminary hearing. These will be conducted by telephone wherever possible.
  • A time limit may be imposed, which will limit the time that a party can spend delivering their evidence, questioning a witness and making submissions. Where such a limit has been imposed, the party will be prevented from proceeding beyond that limit.
  • Judges may require parties to pay a deposit as a condition for continuing with a particular element of their case.
  • Judges will no longer be required to refer a case to the County Court when they believe that costs will exceed £20,000.
  • Judges will be encouraged to recommend that parties use mediation wherever possible.

The Government intends to lay the new rules before Parliament in the spring, with a view to bringing them into force, together with Employment Tribunal fees system, in the summer.

The 2013 budget

Tax and NI information

An additional allowance will remove the first £2,000 from employer's National Insurance bills from April 2014 onwards. This will be called an "Employment Allowance".

The scale of the allowance means that 450,000 of the UK's small businesses will no longer pay any employer National Insurance contributions. Up to 1.25 million employers will benefit, with over 90% of the benefit going to small businesses.

The allowance will be delivered through standard payroll software and the HM Revenue and Customs Real Time Information system. The Government plans to make the allowance easy to administer in order to ensure maximum take up. Employers will only need to confirm their eligibility through their regular payroll processes. The Government will engage with business representative bodies on the details of the design and operation of the new allowance, in order to ensure the system is as simple and effective as possible.

The tax free personal allowance on income tax will increase to £10,000 from April 2014.

Employee shareholder status

The new employee shareholder contract scheme was due to come in with the 2013 budget.

The Government announced its intention to introduce the employee shareholder status regime in October 2012. Individuals who adopted the status would be eligible to receive between £2,000 and £50,000 of capital gains tax exempt shares.

In the autumn of 2012, the Government announced that it was considering options to reduce income tax and NICs liabilities that arise when employee shareholders receive shares, including an option to deem that employee shareholders have paid £2,000 for the shares they receive. The Government adopted this approach, which would ensure that the first £2,000 of share value received is also free from income tax and NICs, as part of the 2013 budget.

However, on 20 March 2013, the House of Lords rejected the government's employee shareholder status proposal, with 232 votes to 178, due to concerns that it would give employers too much power given that, to take it up, employees would forfeit their rights to redundancy pay and unfair dismissal claims.

Changes to collective redundancy

Following on from our February 2013 update, the Government has decided to press ahead with its changes to collective redundancy consultation. Therefore, the collective redundancy consultation period, for proposals to make 100 or more people redundant, will reduce from 90 days to 45 days as of 6 April 2013. The minimum consultation period to make between 20 and 99 employees will be 30 days.

Cause and effect

In the recent case of Walker v SITA Information Network Computing Ltd, the Employment Appeal Tribunal ("EAT") decided that an employee, who suffered from various physical and mental impairments that were exasperated by obesity, was disabled within the meaning of the Equality Act 2010.

In making its decision, the EAT considered whether it was necessary for "physical and mental impairments" to have a medically recognised label attached to them. The EAT held that the purpose of the Equality Act wording is to describe the nature of the impairment. Given that physical and mental labels were considered and satisfied in the case, the appeal was allowed.

The EAT rejected the argument that obesity alone renders a person disabled for the purpose of the Equality Act. The key point to this case is that, so long as there is a physical or mental impairment present, it is immaterial whether the cause is physical or mental.

Fighting fit

The Government has announced new guidance in connection with the use of fitness for work notes. It would like doctors to move away from focussing on what an employee cannot do and instead provide details of what the employee is able to do and how this could facilitate their return to work as quickly as possible.

The guidance also helpfully clarifies that a "fit note" applies to an employee's general fitness for work, rather than specifically relating to their existing job. This allows doctors flexibility around suggesting changes to accommodate employees. Additionally, it states that a doctor cannot issue a "fit note" during the first seven days in which an employee is absent from work, because they are able to self-certify during that time.

The guidance also includes:

  • A useful, improved, question and answer section.
  • An explanation around how a "fit note" shows whether an employee is fit for work and when it expires.
  • Solutions and ideas for employees and employers on how best to facilitate changes for the employee based on the "fit note".
  • Clarification that an employer can indeed refuse to pay sick pay despite an employee having a "fit note".
  • Information regarding situations where an employer cannot make any adjustments and non-medical problems are arising at work.


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