Employment Bill Explanatory and Financial Memorandum - As Introduced
Employment EFM - As Introduced.pdf (228.33 kb)
This Memorandum refers to the Employment Bill as introduced in the Northern Ireland Assembly on 7 December 2015, (Bill 73/11-16)
EXPLANATORY AND FINANCIAL MEMORANDUM
1. This Explanatory and Financial Memorandum has been prepared by the Department for Employment and Learning in order to assist the reader of the Bill and to help inform debate on it. It does not form part of the Bill and has not been endorsed by the Assembly.
2. The Memorandum needs to be read in conjunction with the Bill. It is not, and is not meant to be, a comprehensive description of the Bill. So where a clause or part of a clause or schedule does not seem to require an explanation or comment, none is given.
BACKGROUND AND POLICY OBJECTIVES
3. The Department for Employment and Learning (“the Department”), which has lead responsibility for employment law and employment relations in Northern Ireland, has taken forward a review of employment law guided by better regulation principles, which has sought to identify opportunities to reduce regulatory and administrative burdens on businesses, whilst protecting the rights of individual employees.
4. The review focused in particular on three key themes: early resolution of workplace disputes; efficient and effective employment tribunals; and better regulation measures.
5. As part of its work under the first theme, during 2012 and 2013, the Department engaged with stakeholders to establish whether potential industrial tribunal and Fair Employment Tribunal claims should be routed to the Labour Relations Agency in the first instance, with a view to encouraging parties to explore options for resolving their workplace disputes without the need to go through a formal legal process. The Department also sought feedback on a proposed service to provide parties with a more informed understanding of the potential outcome of a tribunal claim, with a view to informing their choices about how to proceed when a dispute arises.
6. This engagement was taken forward in parallel with work, under the second theme, to develop a draft of substantially revised rules and procedures for industrial tribunals and the Fair Employment Tribunal.
7. Consultation explored a range of issues under the third theme. Consultees were asked to consider the merits of extending the current qualification period for unfair dismissal. In Great Britain the qualification period was extended on 6th April 2012 from one to two years, on the basis that it would increase business confidence, encourage companies to recruit more staff, and potentially reduce the number of tribunal claims. There was significant argument and counter-argument from stakeholders around whether this arrangement should also be introduced in Northern Ireland.
8. Under the third theme, stakeholders were asked for their views on whether it would be appropriate to amend the legislation specifying consultation periods which apply in collective redundancy situations. A change in Great Britain, reducing the relevant period from 90 to 45 days, for consultations involving over 100 employees, meant that the Northern Ireland period (90 days) differed from both that operating in Great Britain (45 days) and that applicable in the Republic of Ireland (30 days).
9. Consultees were also asked about the potential for a new process of ‘protected conversations’ which, if implemented, would allow an employer to have a conversation with an employee about sensitive issues such as performance, where no employment dispute exists, on the basis that these conversations would not be admissible in an unfair dismissal tribunal hearing.
10. Views were also sought on a review of the legislation governing public interest disclosure.
11. In May 2012, the Department published an employment law discussion paper which highlighted relevant employment relations developments in Great Britain and sought the views of Northern Ireland stakeholders on a range of broad policy proposals. Minister for Employment and Learning, Dr Stephen Farry MLA, subsequently made a statement to the Northern Ireland Assembly, on 5th November 2012, in which he highlighted the importance of encouraging and embedding good employment relations practice in the workplace, and set out the actions that he intended to take forward, as well as the policy proposals that he wanted to explore further through public consultation. These intentions were reflected in the Department’s response to the discussion paper, issued also in November 2012.
12. Having secured Executive approval to take forward public consultation, in July 2013 the Department issued a document that sought stakeholders’ views on a number of distinct areas of employment policy. These areas were: early conciliation; neutral assessment; efforts to assist small and medium enterprises (SMEs); the qualification period for unfair dismissal; the maximum amount that a tribunal may award in respect of an unfair dismissal, and the means for calculating an award; collective redundancy consultation periods; compromise agreements; and public interest disclosure.
13. The consultation invited comment on options in these policy areas which took account of relevant Great Britain and Republic of Ireland reform programmes as well as international systems, but were focused on shaping Northern Ireland’s employment law to meet local circumstances.
14. During the passage through Parliament of the Enterprise and Regulatory Reform Act 2013, the UK Government committed to a call for evidence on whistleblowing in order to establish if there was a case for making changes to the existing statutory framework. The responses to the call for evidence included comments on the role of regulators and other bodies who are prescribed as recipients of whistleblowing disclosures (‘prescribed persons’). A follow up limited consultation in Northern Ireland highlighted a lack of consistency in the approach taken by prescribed persons and a lack of communication by them. This consultation also took views on the inclusion of student nurses and student midwives in whistleblowing protections.
15. All of the options set out in the consultation took account of the UK Government’s and the Republic of Ireland’s reform programmes as well as international systems, but on the clear understanding that the key objective was to shape Northern Ireland’s employment law system to suit Northern Ireland’s particular circumstances. As the options on which the Department consulted were distinct areas of employment policy, separate consideration was given, in relation to each area, as to whether legislation was required or whether matters could be addressed using an alternative non statutory route. At the outset it was decided that no legislative action was required to address efforts to assist small and medium enterprises (SMEs), as this could be better achieved through greater use of existing systems. In addition, it was determined that legislating for compromise agreements would not be appropriate.
16. While the Department considers that there are persuasive arguments and support for reducing collective redundancy consultation periods from 90 to 45 days for consultations involving over 100 employees (in line with the approach taken in Great Britain), it has decided not to take forward legislation on the matter in the present Bill as there is insufficient political consensus.
17. For those areas where a decision has been made to take forward legislation, further detail on the options considered is set out below.
18. The Department has a long-standing objective of making it easier for employees and employers to resolve individual employment disputes without it becoming necessary to escalate the matter to a potentially costly, stressful and time-consuming legal process at an industrial tribunal or the Fair Employment Tribunal. In Great Britain, from 6th May 2014, all potential claimants to an employment tribunal must notify Acas (the Advisory, Conciliation and Arbitration Service) of an intention to lodge an employment tribunal claim, and Acas is required to offer applicants the opportunity to use early conciliation.
19. The Industrial Tribunals (Northern Ireland) Order 1996 (“ITO 1996”) and the Fair Employment and Treatment (Northern Ireland) Order 1998 (“FETO 1998”) currently provide a discretionary power for the Labour Relations Agency (“LRA”), to provide pre-claim conciliation to parties in an employment dispute that could be the subject of industrial tribunal (“IT”) or Fair Employment Tribunal (“FET”) proceedings, where either party requests it and where the conciliator believes that there is a reasonable prospect of a settlement being reached. In the main, matters are referred to pre-claim conciliation via the LRA telephone helpline. For example, where the operator believes that a caller has a case that may be amenable to conciliation which, if not settled, is likely to lead to claim to an IT or the FET, that operator can offer the caller the opportunity to go to pre-claim conciliation.
20. It would have been possible to maintain the status quo under the existing provisions; however, at present there is no obligation on prospective claimants to contact the LRA or to consider conciliation at any stage. An IT or the FET cannot refuse to accept a claim on the basis that a claimant has not contacted the LRA. In addition, there is no duty on the LRA to provide conciliation before a tribunal claim has been lodged; there is only a discretionary power.
21. The Department decided, in light of the consultation outcome, to introduce legislation so that, in most cases, people will no longer be able to have a claim accepted by either an IT or the FET (unless an exemption applies), without providing evidence that the LRA has offered conciliation as a means of resolving the dispute. This will be known as “LRA early conciliation”. To be clear, the individual need only apply to the LRA in order to comply with the process; engagement with conciliation, once offered, is discretionary and there are no consequences for the tribunal process in failing to engage.
22. The routing of potential tribunal claims to the LRA in the first instance is intended to encourage potential claimants to consider the merits of resolving their disputes without the need to go through a formal legal process.
23. Another option explored by the Department was a proposed LRA service that would offer parties an informed understanding of the potential outcome of a tribunal claim or arbitration. This was envisaged as an entirely voluntary process, allowing parties to explore with an independent assessor appointed by the Agency possibilities for settling a case. No directly comparable measure exists in Great Britain.
24. The essential difference between this service and those already provided by the LRA would be its ability to provide participants with an indication from an employment relations expert of the potential outcome of the case were it to be referred to the Agency’s statutory arbitration service or a tribunal. The purpose would be to help parties make better informed decisions as to whether or not legal action is the most appropriate way forward for them.
25. The Department has decided to create enabling provisions that will allow for an LRA neutral assessment service to be offered, increasing the Agency’s options in helping parties deal with disputes in an informed and proportionate manner.
Qualification period for unfair dismissal
26. In Great Britain, the unfair dismissal qualifying period (the period employees must work before they become entitled to exercise the right to lodge a tribunal claim for unfair dismissal) changed from one year to two years on 6th April 2012.
27. The qualifying period in Northern Ireland currently stands at one year. This means that an employee must have served one year with his/her employer before he/she can make a claim for unfair dismissal. Employees do not have to meet the qualifying period requirement if the reason for dismissal relates to discrimination or assertion of a statutory right.
28. In Northern Ireland, consideration was given to the merits of extending the current qualification period for unfair dismissal. Account was taken of the fact that, in Great Britain, the period was extended on the basis that it would increase business confidence, encourage companies to recruit more staff, and potentially reduce the number of tribunal claims. Options considered included making changes to the qualifying period affecting all employees, and more limited changes applicable, for example, to new start or small employers only.
29. Having taken all views and the available evidence into account, the Department will not be taking action to amend the unfair dismissal qualifying period in Northern Ireland. The unfair dismissal qualifying period will therefore remain at one year. However the Department is making an amendment to the relevant enabling power so that any future changes to the qualifying period will be subject, not to the confirmatory but, to the draft affirmative Assembly procedure. This will mean that future change to the qualifying period will require the prior approval of the Assembly rather than, as at present, the Assembly’s confirmation after the fact.
Maximum tribunal award in cases of unfair dismissal
30. As part of the wider consideration of issues relating to unfair dismissal, the Department noted the UK Government’s introduction of a cap of 12 months’ pay on the compensatory award that a tribunal may make in respect of a finding of unfair dismissal.
31. The Department sought the views of stakeholders on the amount of compensation that can be awarded in respect of a tribunal claim for unfair dismissal, including the maximum amount, and the means for calculating an award.
32. The Department has not been in receipt of persuasive arguments favouring significant change to the present upper limit for an award. There is no clear consensus on the proposal to place a limit on the maximum amount of an unfair dismissal award equal to 12 months’ salary, or on any other option.
33. The Department has, however, accepted that there is a need to modify the formula, linked to annual changes in the retail prices index (“RPI”), which allows the maximum amount of an unfair dismissal award (and other employment rights related payments, such as the weekly rate for the purposes of calculating a statutory redundancy payment) to be revised to more accurately reflect movements in the RPI.
34. Legislative change in this area is confined to amending the formula for calculating annual RPI based changes to employment rights related payments, including the maximum award for unfair dismissal. Provision is made to allow for future adjustment to such payments, without reference to the RPI, if approved in advance by the Assembly.
Public interest disclosure
35. A legislative framework was established by the Public Interest Disclosure (Northern Ireland) Order 1998 (“the 1998 Order”) to protect individuals who make certain disclosures of information in the public interest (“whistleblowing”), to allow such individuals to bring action in respect of victimisation.
36. A worker who blows the whistle, by making a ‘protected disclosure’ in accordance with the criteria set out in Part VA, Articles 67A to 67L of the Employment Rights (Northern Ireland) Order 1996 (“ERO 1996”), has the right not to be unfairly dismissed or suffer a detriment as a result of having made that disclosure.
37. For a disclosure to be protected by the provisions, the worker must make sure it is either made internally to his/her employer or another responsible person, or to various external bodies including: a legal advisor, a Minister of the Crown or a ‘prescribed person’ listed on the Public Interest Disclosure (Prescribed Persons) Order (Northern Ireland Order 1999.
38. A review of the legislation governing public interest disclosure is required as a legal loophole, created by the 2002 GB Employment Appeal Tribunal decision of Parkins -v- Sodexho, currently exists within whistleblowing legislation. This decision means an individual can rely on the employment protections afforded, where the matter relates to his/her own personal work contract. The intention of the legislation, as the title of the 1998 Order suggests, is to normally only afford protection where disclosures are made in the public interest.
39. The public interest disclosure element of the employment law review consultation sought views on five main elements: whether to amend the law to clarify that disclosures must be in the public interest, thereby closing the loophole identified in Parkins -v- Sodexho; whether to amend the law so that disclosures may be protected, even if they are not made in good faith; amending the definition of ‘worker’ to include people who may have been inadvertently omitted from the protections under the law; whether the definition of worker could be amended in future by subordinate legislation; whether to make employers vicariously liable for detriment experienced by a whistleblower at the hands of colleagues; and general comments on the effectiveness of the public interest disclosure regime in Northern Ireland.
40. The Department, having considered responses to the public consultation and to the limited subsequent consultation, seeks to amend the law to clarify that disclosures must be in the public interest, thereby closing the loophole identified in Parkins -v- Sodexho. As workers should feel able to report allegations of wrongdoing, regardless as to whether the disclosure is made in good faith, the Department is legislating to alter the effect of the ‘good faith’ requirement; the issue of good faith will now be considered by a tribunal in relation to remedy, rather than liability. The Department has also decided to empower industrial tribunals, at their discretion, to reduce a compensatory award by up to 25% in the event that a tribunal finds that a disclosure has not been made in good faith. The Department intends to include student nurses and student midwives in the scope of whistleblowing protections and, in addition, create a power to make future definitional changes by subordinate legislation. The Department is also legislating for employers to be vicariously liable if an employee who makes a protected disclosure subsequently experiences detriment from colleagues. The Department is additionally establishing a power to make regulations requiring prescribed persons for the purposes of Article 67F of the ERO 1996 to produce an annual report on disclosures of information made to the person by workers.
41. The Department considers that the Public Interest Disclosure (Northern Ireland) Order 1998, with amendments made, supported by improved guidance, negates the need for a Statutory Code of Practice at this time.
- provides that, in most cases, a prospective claimant must first have submitted the details of their claim to the Labour Relations Agency before they can lodge the claim at an industrial tribunal or the Fair Employment Tribunal;
- extends confidentiality provisions to ensure that the full range of LRA dispute resolution services is appropriately protected;
- contains enabling provisions that allow for a neutral assessment service to be operated by the LRA;
- converts the Department’s power to amend the qualifying period, for the right to claim unfair dismissal, from confirmatory to draft affirmative procedure;
- provides for more accurate rounding when annual changes, in line with inflation, are applied to the maximum amount of an unfair dismissal award and other employment rights related payments; and empowers the Department to modify these sums if a draft order is approved by the Assembly;
- alters the effect of the good faith test; the issue of good faith will now be considered by a tribunal in relation to remedy, rather than liability;
- introduces a test to close the loophole in public interest disclosure legislation;
- introduces a power to allow the Department to make regulations requiring regulators and other bodies prescribed for the purposes of Article 67F of ERO 1996 (as recipients of whistleblowing disclosures) to report annually on disclosures of information made by workers;
- includes public interest disclosure protections for student nurses and student midwives;
- introduces a power to amend, by subordinate legislation, the definition of worker in public interest disclosure legislation;
- legislates for employers to be vicariously liable if an employee who makes a protected disclosure subsequently experiences detriment from colleagues;
- amends enabling powers to allow for procedural changes to be made to regulations concerning ITs and the FET;
- permits the Department to deal with the provision of careers guidance by way of regulations;
- empowers the Department, by regulations, to deal with the provision of apprenticeships.
COMMENTARY ON CLAUSES
Clause 1: Conciliation before and after institution of proceedings
This clause inserts new Articles 20A, 20B and 20C into the ITO 1996.
Article 20A provides that, other than in certain circumstances (paragraph (7)), a prospective claimant must first have submitted the details of their claim to the LRA before they can lodge the claim at an industrial tribunal. The kinds of proceedings to which this requirement applies are set out in Article 20(1) of the ITO 1996, and are referred to as “relevant proceedings” (see the amendment made by paragraph 3(3) of Schedule 1 to the Bill).
Under paragraph (3) of Article 20A, an LRA conciliation officer will be required to try to achieve a settlement to the dispute, within a prescribed period, so that industrial tribunal proceedings can be avoided. Paragraph (4) of Article 20A provides that if, during that time, the conciliation officer concludes that a settlement is not possible, or the period expires with no settlement having been reached, the officer must issue a certificate to the prospective claimant and a claimant will not be able to lodge a claim with an industrial tribunal without such a certificate (paragraph (8)). The conciliation officer will, however, be able to continue to try to achieve a settlement to the dispute after the prescribed period has expired.
Paragraph (9) of Article 20A provides that, where prospective claimants are no longer employed by the employer, the conciliation officer may attempt to promote either the reinstatement or re-engagement of the individual or, if the individual does not want to be reinstated or re-engaged, or this is not practicable, attempt to achieve an agreement between the parties on the level of compensation to be paid by the employer.
Paragraphs (11) and (12) of Article 20A give the Department the power to make any industrial tribunal procedure regulations which are necessary for the operation of the early conciliation process.
Article 20B places an additional duty on the LRA to promote settlement in certain cases in which the duty under Article 20A does not apply. Paragraph (3) of Article 20B requires an LRA conciliation officer to try to achieve a settlement in a dispute where a person contacts the LRA requesting the services of a conciliation officer in a matter that might otherwise result in industrial tribunal proceedings against them even though the prospective claimant has not contacted the LRA. Paragraph (2) of Article 20B requires the conciliation officer to try to achieve a settlement in a dispute where the prospective claimant contacts them, even where that person is exempted by virtue of Article 20A(7) from the requirement to provide information to the LRA.
Currently, Article 20(3) of the ITO 1996 provides a discretionary power for the LRA to provide pre-claim conciliation to parties in an employment dispute, which could be the subject of tribunal proceedings, where either party requests it and where the conciliator believes that there is a reasonable prospect of a settlement being reached.
Article 20C places a further duty on the LRA to seek to promote settlement in certain cases where proceedings have already been instituted. This ensures that even where cases have progressed to industrial tribunal, the LRA conciliation officer may continue to offer support to the parties to enable them to reach an agreed settlement.
Clause 2: Extension of limitation periods to allow conciliation
This clause gives effect to Schedule 2, which sets out how the relevant time limits for bringing a claim to an industrial tribunal will be extended where necessary to provide sufficient time for early conciliation to take place and to ensure that the claimant is not disadvantaged.
Clause 3: Extended power to define “relevant proceedings” for conciliation purposes
This clause amends Article 20 of the ITO 1996 to provide that orders made by the Department may add to or remove proceedings from the list in Article 20(1) of the ITO 1996.
Orders which add proceedings to the list may also amend the applicable time limit in any relevant statutory provision.
Where the order removes proceedings from the list, consequential changes can be made to any extension to the time limit which is provided in any relevant statutory provision.
Clause 4: Assessment of likely outcome of any proceedings
This clause inserts a new Article 20D into the ITO 1996, providing a power for the LRA, subject to the agreement of the relevant parties, to ask a person who has been appointed by the LRA for the purpose of assessing the likely outcome of proceedings, for a view on the case.
This power fulfils the Department’s policy commitment to enable the LRA to provide neutral assessment. Such an assessment will be a non-legally binding view as to the likely outcome of any proceedings that might be, or have been, instituted. The clause requires that the person appointed by the LRA communicates that view to the parties and the LRA.
Clause 5: Power to require party to proceedings to pay deposit
This clause amends Article 11 of the ITO 1996 to provide the Department with the power to prescribe by regulations requirements, in addition to those already in statute, which parties may be required to meet as a condition of continuing to participate in particular IT proceedings.
IT procedure regulations currently require a party to pay a deposit where their case is considered to have little reasonable prospect of success. These regulations are under review, and the enabling power will allow the Department to legislate in response to the relevant public consultation, once concluded.
FAIR EMPLOYMENT TRIBUNAL
Clause 6: Conciliation before and after complaint to Fair Employment Tribunal
This clause inserts new Articles 88ZA and 88ZB into the FETO 1998. Its provisions are comparable to those in clause 1.
Article 88ZA provides that, other than in certain circumstances (paragraph (7)), a prospective claimant must first have submitted the details of their claim to the LRA before they can lodge the claim at the FET. Under paragraph (3) of Article 88ZA, an LRA conciliation officer will be required to try to achieve a settlement to the dispute, within a prescribed period, so that FET proceedings can be avoided. Paragraph (4) of Article 88ZA provides that, if during that time the conciliation officer concludes that a settlement is not possible, or the period expires with no settlement having been reached, the officer must issue a certificate to the prospective claimant and a claimant will not be able to lodge a claim with the FET without such a certificate (paragraph (8)). The conciliation officer will, however, be able to continue to try to achieve a settlement of the dispute after the prescribed period has expired.
Paragraphs (10) and (11) of Article 88ZA give the Department the power to make any FET procedure regulations which are necessary for the operation of the early conciliation process.
Article 88ZB places an additional duty on the LRA to promote settlement in certain cases in which the duty under Article 88ZA does not apply. Paragraph (3) of Article 88ZB requires an LRA conciliation officer to try to achieve a settlement in a dispute where a person contacts the LRA requesting the services of a conciliation officer in a matter that might otherwise result in FET proceedings against them even though the prospective claimant has not contacted the LRA. Paragraph (2) of Article 88ZB requires the conciliation officer to seek to promote a settlement in a dispute where the prospective claimant contacts the Agency, even where that person is exempted by virtue of Article 88ZA (7) from the requirement to provide information to the LRA.
Currently, Article 88(3) of the FETO 1998 provides a discretionary power for the LRA to provide pre-claim conciliation to parties in an employment dispute, which could be the subject of tribunal proceedings, where either party requests it and where the conciliator believes that there is a reasonable prospect of a settlement being reached.
Article 88ZC places a further duty on the LRA to seek to promote settlement in certain cases where proceedings have already been instituted. This ensures that even where cases have progressed to the FET, the LRA conciliation officer may continue to offer support to the parties to enable them to reach an agreed settlement.
Clause 7: Extension of time limit to allow conciliation
This clause inserts Article 46B into the FETO 1998. This sets out how the relevant time limits for bringing a claim before the FET will be extended where necessary to provide sufficient time for early conciliation to take place and to ensure that the claimant is not disadvantaged.
Comparable provisions extending time limits in respect of industrial tribunal matters are contained within Schedule 2.
Clause 8: Assessment of likely outcome of any proceedings
This clause, which is comparable to clause 4, inserts a new Article 88ZD into the FETO 1998. This provides a power for the LRA, subject to the agreement of the relevant parties, to ask a person who has been appointed by the LRA for the purpose of assessing the likely outcome of proceedings, for a view on the case.
This power fulfils the Department’s policy commitment to enable the LRA to provide neutral assessment. Such an assessment will be a non-legally binding view as to the likely outcome of any proceedings that might be, or have been, instituted. The clause requires that the person appointed by the LRA communicates that view to the parties and the LRA.
Clause 9: Power to require party to proceedings to pay deposit
This clause, which is comparable to clause 5, amends Article 84B of the FETO 1998 to provide the Department with the power to prescribe by regulations other requirements in addition to those already in statute, which parties may be required to meet as a condition of continuing to participate in particular FET proceedings.
FET procedure regulations currently require a party to pay a deposit where their case is considered to have little reasonable prospect of success. These regulations are under review, and the enabling power will allow the Department to legislate in response to the relevant public consultation, once concluded.
Clause 10: Employment judges: industrial tribunals
Clause 10 inserts paragraph (3) into Article 3 of the ITO 1996. This permits the Department to make regulations which provide that the members of the panel of chairmen of industrial tribunals as well as the President and the Vice-President of Industrial Tribunals and the Fair Employment Tribunal may be referred to as employment judges.
Clause 11: Employment judges: Fair Employment Tribunal
Clause 11 amends Article 82 of the FETO 1998, so that the existing power under Article 81 of that Order can be used by the Department to make regulations to provide that the members of the panel of chairmen of the FET may be referred to as employment judges.
Clause 12: Disclosures not protected unless believed to be made in the public interest
The effect of clause 12 is to insert a specific public interest test into the ERO 1996. This ensures that, in order to benefit from protection, whistleblowing claims must, in the future, satisfy a public interest test and disclosures, which can be characterised as being of a personal rather than public interest, will not be protected.
For example, if a worker does not receive the correct amount of holiday pay (which may be a breach of the terms of his/her contract of employment), this is a matter of personal rather than wider interest.
The worker must also show that the belief that the disclosure was in the public interest was reasonable in the circumstances.
Clause 13: Power to reduce compensation where disclosure not made in good faith
The effect of this clause is to remove the requirement in Articles 67C, 67E, 67F, 67G and 67H of the ERO 1996 that a disclosure be made in good faith in order to be a protected disclosure and benefit from whistleblowing protections. In addition, the clause amends the ERO 1996 to provide industrial tribunals with the power to reduce an award of compensation by up to 25%, where a protected disclosure has not been made in good faith.
“Good faith” is not defined in the ERO 1996, but the courts in Great Britain have held that where the predominant motive of the individual making the disclosure was not directed at remedying one of the wrongs listed in section 43B of the Employment Rights Act 1996, but was instead for some ulterior purpose, the disclosure is unlikely to have been made in good faith (see Street -v- Derbyshire Unemployed Workers’ Centre  IRLR 687). Article 67B is the corresponding provision in the ERO 1996.
Currently, the requirement for a disclosure to be made in good faith can affect the success of the claim. If an industrial tribunal finds that a disclosure was not made in good faith and instead there was an ulterior motive which was the predominant reason for the disclosure, the claim will fail.
Clause 13 alters the effect of the good faith test; the issue of good faith will now be considered by a tribunal in relation to remedy, rather than liability, so a claim will not fail as a result of an absence of good faith. An industrial tribunal will have the discretion to reduce a compensatory award by up to 25% in the event that it finds the disclosure has not been made in good faith.
Clause 14: Protected disclosures: reporting requirements
This clause introduces a power to enable the Department to make regulations requiring a person prescribed for the purposes of Article 67F of the ERO 1996 to produce an annual report on disclosures of information made to the person by workers. The purpose of the annual reporting requirement is to ensure more systematic processes across all prescribed persons in the way public interest disclosures are handled, thereby working towards a consistent standard of best practice for disclosures. It will also provide greater assurance to the whistleblower that action is being taken by the prescribed person, thereby increasing confidence in their role.
The content of the report is to be prescribed by regulations, which will also determine how the report is published and its timing. Reports may not include content that would reveal the identity of the individual who has made the disclosure or the employer or organisation to which the disclosure relates.
Clause 15: Worker subjected to detriment by co-worker or agent of employer
The effect of this clause is to introduce a vicarious liability provision so that where a worker is subjected to a detriment by a co-worker done on the ground that the worker made a protected disclosure, and this detriment is done in the course of the co-worker’s employment with the employer, that detriment is a legal wrong and is actionable against both the employer and the co-worker.
The employer will only be liable for a detriment where it is done by a worker in the course of employment or by an agent of the employer with the employer’s authority. In this context, the term “agent” refers to someone who is appointed by the employer to perform duties on their behalf (such as a contractor).
Employers are able to rely on the defence in new paragraph (1D) of Article 70B of the ERO 1996 if they have taken all reasonable steps to prevent the co-worker from subjecting the whistleblower to a detriment. If the defence applies the employer will not be liable for the actions of the co-worker.
Where a whistleblower is bullied or harassed by a co-worker but the employer can use the defence in paragraph (1D), the co-worker will still be liable and the worker could bring a claim against that co-worker.
Clause 16: Extension of meaning of “worker”
This clause amends Article 67K of the ERO 1996 in relation to protected disclosures. Article 67K extends the meaning of "worker" for Part VA of that Order. The effect of the amendment is that student nurses and student midwives who undertake work experience as part of a course of education or training approved by, or under arrangements with, the Nursing and Midwifery Council in accordance with article 15(6)(a) of the Nursing and Midwifery Order 2001 will fall within the extended definition of worker who may make a protected disclosure. A student nurse or student midwife who makes a protected disclosure concerning his/her work experience may bring a claim against the person providing that work experience, which will be determined by industrial tribunal.
In addition, clause 16 introduces a power in Article 67K of the ERO 1996 to permit the Department to amend, by order, the definition of “worker” in that Article. The power can be used to increase the scope of protection. It can, however, only be used to remove categories of individuals where, in the opinion of the Department, no such individuals exist (i.e. the category has become obsolete).
Clause 17: Careers guidance
The effect of clause 17 is to introduce a power in section 1 of the Employment and Training Act (Northern Ireland) 1950 which enables the Department to make regulations in relation to the impartial provision, by suitably qualified persons, of careers guidance that is identified as being in the best interests of those receiving it.
Clause 18: Apprenticeships
The effect of clause 18 is to introduce a power in section 1 of the Employment and Training Act (Northern Ireland) 1950 which enables the Department to make regulations in relation to arrangements for providing apprenticeships. The regulations may specify the target groups to whom and the conditions under which apprenticeships are to be made available.
Clause 19: Indexation of amounts: timing and rounding
This clause amends Article 33(2) and (3) of the Employment Relations (Northern Ireland) Order 1999 (“ERO 1999) by setting a time for orders made under that Article to come into operation and amending the calculation which is to be used to increase or decrease the relevant limits.
Article 33(2) of the ERO 1999 provides that, if the Retail Prices Index for September of a year is higher or lower than the RPI for the previous September, the Department is required to make an order to increase or decrease the limits which apply to certain IT awards and other amounts payable under employment legislation.
The list of sums to be increased or decreased as a result of a change in the RPI is set out in Article 33(1) of the ERO 1999. The sums for the relevant payments and awards are revised by order annually under the ERO 1999. Clause 19 amends Article 33(2) so that future changes to the relevant limits are to be made on 6th April each year rather than (as currently) as soon as practicable. All limits remain linked to the RPI.
Clause 19 also changes the rounding calculation set out in Article 33(3) of the ERO 1999 so that all limits are rounded up or down to the nearest pound.
Additionally, a new paragraph (7) is added to Article 33 specifying that the Department may at any time make an order increasing or decreasing sums dealt with under Article 33. Such an order would need to be laid in draft before, and approved by, the Assembly before becoming operational.
Clause 20: Prohibition on disclosure of information held by the Labour Relations Agency
This clause inserts Article 90B into the Industrial Relations (Northern Ireland) Order 1992. The new Article prohibits the LRA, or persons appointed by the LRA, from releasing information relating to a worker, employer of a worker, or a trade union, that they hold in the course of performing their functions.
Paragraph (2) of Article 90B specifies the circumstances in which the prohibition does not apply, for example if the disclosure is made for the purposes of a criminal investigation, or in a way that means that no-one to whom the information relates can be identified. Paragraph (4) of the Article makes a breach of the prohibition a criminal offence, punishable by a fine. By virtue of paragraph (5), any such proceedings, brought against the person who has breached the prohibition in Northern Ireland, can only be instituted with the consent of the Director of Public Prosecutions for Northern Ireland.
Clause 21: Variation in procedures for certain orders and regulations
Clause 21 amends Article 251 of the ERO 1996 so that the Department’s powers to amend certain legislative provisions are made subject to the draft affirmative procedure before the Assembly. These include powers relating to the qualifying period for unfair dismissal and certain of the new public interest disclosure provisions inserted into the ERO 1996 by the Bill.
Application of the draft affirmative procedure means that any rules under these powers must be laid in draft and cannot be made unless approved by the Assembly.
The clause also contains technical amendments allowing for more efficient procedural handling of certain regulations containing provisions which are subject to different Assembly procedures.
Clause 22: Statutory shared parental pay: correction of references
Clause 22 corrects a small number of references in the Social Security Contributions and Benefits (Northern Ireland) Act 1992, dealing with statutory shared parental pay, which were introduced by the Work and Families Act (Northern Ireland) 2015.
Clause 23: References to tribunal jurisdictions to which Articles 17 and 27 of the Employment (Northern Ireland) Order 2003 apply
Clause 23 updates legislative references in Schedules 2 and 4 of the Employment (Northern Ireland) Order 2003 (“EO 2003”).
Schedule 2 to the EO 2003 lists the range of employment rights in respect of which, if minimum statutory disciplinary and dismissal procedures have not been followed in the workplace, an industrial tribunal may adjust an award.
Schedule 4 to that Order lists the jurisdictions in respect of which industrial tribunals are normally required to make or increase an award if an employer has provided an employee with an incomplete or inaccurate written statement of employment particulars.
Clause 24: Repeals
Clause 24 gives effect to the repeals of statutory provisions set out in Schedule 3.
Clause 25: Interpretation
Clause 25 provides that for the purpose of this Bill any reference to “the Department” means the Department for Employment and Learning.
Clause 26: Commencement
This clause provides that the Department may make commencement orders bringing the provisions of the Act into operation on one or more dates. This is except for those set out in clause 25 (Interpretation), clause 26 (Commencement) and clause 27 (Short title).
FINANCIAL EFFECTS OF THE BILL
42. The majority of the measures in the Bill will not have any financial effect for Government as they amend current processes rather than introduce new obligations.
43. Introduction of early conciliation will have an initial one off set up cost in the region of £50,000 and incur an additional staffing cost of approximately £130,000 annually. This will be offset by an anticipated cost saving of £170,000 in the frontline resource budget of Office of Industrial Tribunals and Fair Employment Tribunal, due to the anticipated reduction in the number of cases.
44. Neutral assessment has the potential to generate net costs to Government in the region of £165,000 per annum, but with modest net benefits for employees and employers who avoid tribunal proceedings as a result of settling their case following an assessment.
HUMAN RIGHTS ISSUES
45. The exercise of powers modified by clauses 5 and 9, concerning the ability to require a deposit in order to continue with industrial tribunal and Fair Employment Tribunal proceedings respectively, has potential implications for access to justice.
46. It should be noted that power to require a deposit in certain circumstances already exists in statute; the intention of clauses 5 and 9 is to allow for possible changes to the circumstances, set out in subordinate legislation, in which this can occur.
47. Before seeking to exercise these powers to amend subordinate legislation, the Department will seek views through public consultation and will give careful consideration to human rights implications.
48. The provisions in the Bill are not otherwise deemed to have implications for human rights.
EQUALITY IMPACT ASSESSMENT
49. The majority of the measures in the Bill will not impact on equality of opportunity or good relations.
50. The proposals for early conciliation and neutral assessment will have modest positive benefits for all of the groupings listed in section 75 of the Northern Ireland Act 1998 in the sense that they will open up opportunities for resolving workplace disputes in a more constructive and efficient manner. However, some of the policy proposals are expected to generate greater benefits for particular groups:
- single parents (predominantly women), who due to family commitments and their less favourable economic position do not have time or resources for lengthy or complex legal processes;
- individuals with disabilities, and in particular mental health disabilities associated with or exacerbated by stress;
- racial, ethnic, national or religious groups employed as migrant workers whose first language is not English; and
- persons bringing a tribunal claim relating to their sexual orientation or to political or religious discrimination.
- These groups will all benefit from enhanced information and advice, and access to an alternative route to resolving disputes.
- Whilst impacts are considered to be positive, they are also considered to be relatively modest.
SUMMARY OF THE REGULATORY IMPACT ASSESSMENT
53. Early conciliation by the LRA will produce new benefits to employers of approximately £1,220,000 per annum based on savings on the avoidance of costs that would otherwise be incurred in the tribunal processes. Net benefit to employees of £580,000 per annum is expected from earlier resolution of disputes through early conciliation.
54. Neutral assessment is considered to be associated with modest annual benefits to employees of approximately £110,000, and to employers of approximately £280,000.
55. The Minister for Employment and Learning had made the following statement under section 9 of the Northern Ireland Act 1998:
“In my view the Employment Bill would be within the legislative competence of the Northern Ireland Assembly.”
SECRETARY OF STATE CONSENT
56. The Secretary of State has consented under section 8 of the Northern Ireland Act 1998 to the Assembly considering the Bill.