The Enterprise and Regulatory Reform Act is to finally receive Royal Assent, bringing about some of the most significant employment reforms seen in the UK in recent years.

Audrey Williams partner in Global Law Firm Eversheds comments: “Now that Royal Assent is to be granted, the Enterprise and Regulatory Reform Act will introduce major changes to UK employment law, a number of which will be implemented in two months’ time. Many of the changes will be welcomed by employers. Others, however, present cause for concern or unforeseen hazards for the unwary employer, such as the new ability to agree “off the record” terminations of employment. One of the more contentious aspects of the Act as it progressed through the parliamentary debate proved to be provision for introducing protection against caste discrimination. Disagreement between the Commons and the Lords over this issue was largely responsible for holding up the passage of the Bill in its latter stages. Such issues were finally resolved last night through a compromise which will see discrimination against an individual because of their caste outlawed but not immediately, probably in one to two years.

The provisions of the Act are far-reaching and will bring about change in such diverse areas as the tribunal process, unfair dismissal compensation, directors’ pay and whistle-blowing protection. Amongst the most significant reforms for employers could prove the introduction of confidentiality for discussions with employees regarding the termination of employment. Enabling employers to initiate frank and open discussions with employees over their future employment, without fear of prompting tribunal claims, has been a long-held objective of the Government. The new provision, which will come into force this summer, aims to prevent disclosure of such conversations in an employment tribunal context.

Whether this provision helps to promote more open dialogue between employers and staff remains to be seen. Employers nonetheless need to proceed with caution as the Act provides limited protection only. For a start, employers must not act improperly in either initiating or engaging in discussion. It is also only in the context of certain unfair dismissal claims that negotiations or settlement offers will be inadmissible in subsequent tribunal proceedings. Claims involving potentially automatically unfair dismissal, such as might arise in the context of whistle-blowing or trade union activities, are not included. Neither are other claims, such as discrimination. Bearing this in mind, it could prove extremely difficult for tribunals to ignore only parts of a discussion when other allegations come in to play.

Also included amongst the various employment law reforms contemplated by the Act is amendment to current whistle-blowing protection. Legal protection came about under the Public Interest Disclosure Act 1998 and prevents those who disclose employer wrong-doing from being disadvantaged in the workplace or, worse, dismissed. However, it has always been something of a curiosity that, despite its title, the legislation did not specifically require disclosures to be “in the public interest”, merely made in good faith. The Act addresses this seeming anomaly by removing the duty of good faith and instead imposing a requirement that, to be protected, disclosures must be made in the public interest.

Importantly, the Act will also introduce new responsibilities for employers to protect employees who make such disclosures from detrimental treatment by colleagues, including bullying or harassment. Unless the employer can demonstrate it had taken reasonable steps to prevent such activity, it will be liable. Although a date for implementation of this particular provision has yet to be released, it is vitally important that employers have a policy in place to protect genuine whistle-blowers and moreover, they communicate this to their workforce.”