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Far reaching employment law reforms - are they all they promise?

December 2011

Significant proposals to reform employment law were announced by the government on 23 November 2011, expressed to be aimed at making it easier for businesses to employ, manage and dismiss staff.

The proposals fall into two categories:

1. Changes the government is committed to; and

2. Changes the government intend to consult over.

Changes the government is committed to

  • Overhauling the employment tribunal system (which is predicted to save employers £40 million a year).
  • Simplifying the provisions relating to compromise agreements.
  • Increasing the qualifying period of employment required to bring an unfair dismissal claim from 1 year to 2 years.
  • Requiring that all employment disputes are lodged with ACAS before the claim may proceed to tribunal.
  • Unfair dismissal cases to be heard by a judge sitting alone.

Changes the government will consult on

  • Improving/simplifying the TUPE rules.
  • Seeking views on the introduction of compensated no-fault dismissals for micro firms (firms with fewer than 10 employees).
  • Removing whistleblowing protection from employees who make a disclosure about their own contract of employment.
  • Giving employment judges the power to impose a financial penalty on employers for breach of employment rights.  This penalty will be payable to the Exchequer.
  • Simplifying the procedural rules of employment tribunals.
  • The introduction of fees for anyone bringing an employment tribunal claim.
  • Introducing a “rapid resolution” scheme which will be a quicker and cheaper alternative to determination at employment tribunals.
  • A greater use of mediation.
  • ‘Protected Conversations’.  Protected conversations are supposed to enable employers to have frank and open discussions with their employees, about an employee’s poor performance for example, without the conversation being admissible in any tribunal claim.  See the ‘Resources’ section below for a link to further information on protected conversations.

Commentary

It is claimed that these proposals will result in the biggest shake up of employment law in decades.  However until the results of the consultations have been published and the new legislation scrutinised, this remains to be seen.  It appears that the majority of these proposals would, if enacted as proposed, have the effect of reducing the number of cases that make it to tribunals (and the tribunals themselves would be simpler and more efficient).  At the same time, large areas of employment law, mainly those derived from Europe, - such as discrimination and equal pay - will remain largely unaffected.  Many commentators expect to see an increase in such claims to compensate for the lost of unfair dismissal rights for those with less than 2 year’s service.

It remains to be seen whether those changes to employment protection rights have the desired effect of making it easier to employ, manage or dismiss.  An unwelcome outcome would be that they simply amount to move complexity, which defeats the stated intention.

Resources

Employment law update – protected conversations and without prejudice negotiations

For further information or to discuss the issues raised, please contact David Widdowson or Stephen Wright on +44 20 3051 5711.