SBEE: What it means for employment law

Tuesday 6 October 2015

In March our blog looked at the Small Business, Enterprise and Employment Bill (SBEE) which was introduced in the last Queen’s Speech. Earlier this month our corporate team provided a commercial update of the SBEE. This latest update will focus on the employment law aspects of the SBEE.

Penalty for underpayment of the national minimum wage

The SBEE amends the National Minimum Wage Act 1998 to allow for the maximum £20,000 penalty for non-payment to apply in respect of each worker who has not been paid the NMW. This provision came into force on 26 May 2015.

Zero-hours contracts; a ban on exclusivity

‘Exclusivity’ clauses in ‘zero-hours’ contracts are invalid and unenforceable. However, until further regulations come into force we will not know the extent to which anti-avoidance measures will go to. An example of this would be an employer guaranteeing as little as an hour’s employment per week to circumvent the ‘exclusivity’ ban. This provision also came into force on 26 May 2015.

Public sector exit payments

The SBEE contains the necessary power for the government to regulate high earning employees from exiting public sector roles and taking substantial termination payments should they return to a role within the public sector. Such employees will be liable to repay a proportion of their redundancy payment back to the government as the payment of such large severance packages has been highlighted as a poor use of public funds. The repayment of such termination payments is likely to be on a sliding scale dependent upon the time between termination and re-employment. The regulations are likely to be targeted at those with salaries exceeding £100,000.

Fines payable for Employers who fail to pay Employment Tribunal award

The SBEE has sought to introduce financial penalties for employers who fail to pay ET awards. Failure to pay will result in a ‘warning notice’ in the first instance followed by a ‘penalty notice’ if payment is not received within 28 days. The penalty payment is payable to the treasury as opposed to the claimant (who will still receive the original award). The amount of the penalty has been set at 50% of the unpaid amount owed to the claimant (subject to a minimum of £100 and a maximum of £5,000). Such penalty will be reduced if payment is made promptly.

Equal-pay reporting

The SBEE has a requirement now that compels employers with more than 250 employees to publish pay data: “for the purpose of requiring the information showing whether there are differences in the pay of males and females”. To date voluntary publication has proved unsuccessful and private sector employers only have to publish gender pay data in the event that they lose an equal pay claim at the ET.