The Government publishes proposed employment law reforms

Posted 16/09/2012

On Friday 14 September, the Government published its consultations on rewriting the employment law map as we know it. Whatever your political view of the proposals, there is no doubt that the Government has decided to give significant attention to attempts to reduce the cost and risk of employment tribunals for businesses.  

I will leave it to the reader to decide whether this is a problem more imagined than real, given recent statistics released by the Ministry of Justice, which show a 15% reduction in claims last year compared with the previous year.

The reforms detail the following:

•    settlement agreements consultation introduced, including a suggested template letter and guidance on how employers and employees would reach agreement. This appears to go further than existing compromise agreements, which most HR professionals will be familiar with. The extent to which this will be formalised “rebadging” of existing arrangements is debatable
•    unfair dismissal claims consultation is an area attracting most comment at present. The consultation will look at the potential for reducing the compensation cap, (currently £72,300). The two proposals are a cap of up to 12 months pay and a new, reduced, upper limit which has been mooted to be the national median average earnings (£25,882)
•    further streamlining of employment tribunals, following on from Justice Underhill’s review, with a consultation on proposals on how judges could dismiss weak cases more easily and reduce the number of preliminary hearings
•    a summary of responses to the call for evidence on changes to TUPE, with a commitment to consult on issues raised by business by the end of the year
•    Based on evidence presented by business, the Government will not be taking forward the proposal on no fault dismissal, but will work with Acas to make the guidance on their code on discipline and grievance more accessible, especially for small businesses.

We will produce a more detailed comment on the proposals as the consultation goes forward. However, the immediate area of interest for potential employment tribunal litigants are the proposals to reduce the unfair dismissal compensation cap. This does not have any bearing on the unlimited level of damages for discrimination complainants, or other claims like “whistleblowing” unfair dismissal.

Read more about the reforms here.