Government announces major package of employment law reforms

 

Dr Cable announced the results of a consultation on Resolving Workplace Disputes and the Red Tape Challenge review of employment law. A package of measures will retain key protections for employees, but also fundamentally improve the way employers take people on, manage disputes and let people go.

Changes will include a radical overhaul of employment tribunals, which is expected to deliver £40 million a year in benefits to employers and result in fewer tribunal claims each year. Ministers will also start a ‘call for evidence’ on the consultation rules for collective redundancies and whether the current 90 day minimum consultation period where 100 or more redundancies is proposed is restricting businesses and should be reduced. The Government will explore the consequences of reducing the 90 day limit to 60, 45 or possibly even 30 days. The call for evidence will run from now until 31 January 2012.

In response to the suggestion that dismissal laws are too onerous for small businesses in particular, the Government will launch a call for evidence on two proposals. Firstly, it will seek views on a proposal to introduce compensated no-fault dismissal for micro-businesses with 10 or fewer employees. Secondly, it will look at ways to slim down existing dismissal processes, how they might be simplified, including potentially working with the Advisory, Conciliation and Arbitration Service (ACAS) to make changes to their Code of Practice, or by introducing supplementary guidance for small businesses.

The Ministry of Justice will also shortly publish a consultation on the introduction of fees for anyone wishing to take a claim to an employment tribunal. The proposals will transfer the cost burden from taxpayers to users of the system and encourage claimants to consider seriously the validity of their claim. The consultation will seek views on two options. The first proposes a system that involves payment of an initial fee to lodge a claim and a second fee to take that claim to hearing. The second option proposes introducing a £30,000 threshold, so those seeking an award above this level will pay more to bring a claim.

Of the 159 regulations examined in the employment theme of the Red Tape Challenge, more than 70 regulations are to be merged, simplified or scrapped.

In relation to the Red Tape Challenge, the Government will also:

• Start a call for evidence on proposals to simplify the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), which many businesses say are too complex and bureaucratic and may, in some areas, unnecessarily gold-plate EU rules – the call for evidence will again run from now until 31 January 2012.
• Close a whistle-blowing case-law loophole which allows employees to blow the whistle under the Public Interest Disclosure Act 1998 about their own personal contract of employment.
• Merge 17 National Minimum Wage regulations into one single, consolidated set which will simplify the current regime, making it easier for employers to navigate the law.
• Consult in spring 2012 to streamline the current regulatory regime for the recruitment sector.
• Review the paperwork around implementation of the EU Agency Workers Directive, in 18 months’ time, with a focus on simplifying it.
• Create a universally portable Criminal Records Bureau (CRB) check that can be viewed by employers, instantly online, from early 2013 (these policy changes are being led by the Home Office).
• Extend the right to request flexible working, and to modernise maternity leave so it becomes shared and flexible parental leave.

As part of its response to the Resolving Workplace Disputes consultation, which took place earlier this year, the Government has also now committed to:

• Requiring all employment disputes to go to ACAS to be offered pre-claim conciliation before going to an employment tribunal.
• Increasing the qualification period for unfair dismissal from one to two years from April 2012.
• Publishing a consultation in the New Year on introducing a system of ‘protected conversations’ which allows employers to discuss issues such as retirement or poor performance in an open manner with staff without this being used in any subsequent tribunal claims.
• Appointing Mr Justice Underhill to lead an independent review of the existing rules of procedure governing employment tribunals. This review will look to address concerns that they have become increasingly complex and inefficient over time and are no longer fit for purpose and the findings will be presented to Ministers next year.
• Consulting on measures to simplify compromise agreements, which will be renamed ‘settlement agreements’, to enable the two sides to reach a no-fault settlement in exchange for an agreement not to bring future claims.
• Considering how and whether to develop a ‘Rapid Resolution’ scheme for more straightforward employment disputes which will offer a quicker and cheaper alternative to determination at an employment tribunal – any proposals would be the subject of a full public consultation.
• Modifying the formulae for up-rating employment tribunal awards and statutory redundancy payments to round to the nearest pound (the Government anticipates that the reduction in redundancy pay and subsequent reduction in associated compensation payments made in employment tribunals will have a direct net saving to business of £5.4 million each year).

In addition, in relation to employment tribunal reform, from April 2012 witness statements will be taken as read, expenses are to be withdrawn for witnesses, employment judges are to sit alone for unfair dismissal claims and the maximum level for cost awards to businesses in winning a vexatious tribunal claim is to rise from £10,000 to £20,000. Finally, deposit order amounts for claimants, when a judge determines that a part of claim is unmerited, will rise from £500 to £1,000 and financial penalties will be introduced on employers who are found at tribunal to have breached employment rights (equal to half of the amount of the total award, subject to a minimum threshold of £100 and a maximum ceiling of £5,000), payable to the Exchequer, subject to a discretion by employment judges about whether to exercise this power, to ensure that employers are not penalised for inadvertent errors. The penalty will be reduced by 50% if it is paid within 21 days.

Some changes proposed will require the Government to introduce primary legislation, subject to the Parliamentary timetable.

Words by Abbey Legal