Government announces ‘radical’ employment law reforms

The Government are proposing the ‘most radical reform of the employment law system for decades’.

The stated aim of the reform is to create a clear, concise and effective employment law system, turning away from unnecessary, time consuming and costly litigation. It also aims to improve the working relationship between employer and employee by balancing the needs of employers against individual rights. The current system is perceived as too complex and bureaucratic, so by modernising the system, the Government hopes to encourage employers to actively recruit and create new jobs. Deregulating a system which is onerous and burdensome on smaller employers – with a move towards a trust based working relationship – should help to create a flexible labour market which is essential for a successful economy.

The Government intends to implement changes by April 2012 and to have a consultation period with a view to making further radical changes in the foreseeable future.

What is likely to change in April 2012?

• Increase qualifying period from one year to two years to bring a claim for Unfair Dismissal;
• Allow Employment Judges to hear unfair dismissal cases alone – remove the two lay members to ensure maximum value for money for the taxpayer;
• Increase the limit for deposit orders and cost awards – to ?1,000 and ?20,000 respectively;
• Tribunals can levy financial penalties on employers where their behaviour is seen as an ‘aggravating features’ – i.e. unreasonable behaviour – awards can be in the region of £5,000;
• All witness statements to be taken as read unless tribunal directs otherwise and parties bear the costs of witnesses’ attendance at a hearing if pursuant to a witness order.

Further proposals to be considered in the ‘consultation’ period:

• Slim down and simplify the dismissal process – a change to the ACAS code and a differentiation between process adopted for small and large employers;
• Reduce the number of tribunal claims each year – ACAS plays a more prominent role at initial stage of claim introducing a pre-claim conciliator in an attempt to avoid litigation;
• Reforming employment tribunals which are currently complex, inefficient, ineffective and not fit for purpose – introduction of a quicker and cheaper ‘Rapid Resolution’ scheme;
• Encourage settlement before tribunal and simplifying compromise agreements to enable both sides to reach a no-fault settlement in exchange for an agreement not to bring future claims;
• Introduction of a ‘reasonable’ cost to bring a claim at the tribunal – encourage more realistic expectations. A staggered fee to firstly issue a claim and second fee to proceed to a hearing – an employee seeking more than ?30,000 pays more to proceed to a hearing. This is not to be seen as a barrier to justice;
• Simplify the Transfer or Undertakings (Protection of Employment) Regulations (TUPE) 2006;
• Encouraging active ‘protected conversations’ between employer and employee in order to address work related issues/performance. Such conversations cannot be relied on at tribunal and reduce the chance of issues going to tribunal;
• Introduce ‘no fault’ dismissal for micro employers (under 10 employees);
• Closing a loophole in the Public Interest Disclosure Act relating to whistle blowing.

These reforms apply to you if you are an individual employee, run a large multinational business or a small regional business. The proposals will affect your employment relations.