Government announces employment law overhaul

Business secretary Vince Cable today announced what he called “the most radical reform to the employment law system for decades”.  

During a speech to EEF, the manufacturers organisation, 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 include an overhaul of employment tribunals, which Cable says will deliver £40 million a year in benefits to employers. Ministers will also start a call for evidence on whether the 90-day minimum consultation period for collective redundancies should be reduced.

The Government will launch a call for evidence on two proposals on dismissal laws. It will seek views on a proposal to introduce compensated no fault dismissal for micro firms, with fewer than 10 employees. It will also look at ways to simplify existing dismissal processes, including potentially working with Acas to make changes to their Code, or offering supplementary guidance for small businesses.

The Ministry of Justice will shortly publish a consultation on the introduction of fees for anyone wishing to take a claim to an employment tribunal. 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. The Government will:

• Publish a call for evidence on proposals to simplify the TUPE rules
• Close a whistleblowing case law ‘loophole’ which allows employees to blow the whistle about their own personal work contract.
• Merge 17 National Minimum Wage regulations into one set
• Consult in the spring to streamline the current regulatory regime for the recruitment sector.
• Create a universally portable CRB check that can be viewed by employers instantly online, from early 2013.

As part of the response to the Resolving Workplace Disputes consultation, the Government has committed to:

• Requiring all employment disputes to go to the Advisory, Conciliation and Arbitration Service (Acas) to be offered pre-claim conciliation before going to a tribunal and from April 2012 increasing the qualification period for unfair dismissal from one to two years.
• Publishing a consultation in the new year on ‘protected conversations’ which allows employers to discuss issues like 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.
• A further consultation on measures to simplify compromise agreements, which will be renamed ‘settlement agreements’.
• Announcing plans to consider how and whether to develop a ‘rapid resolution’ scheme which will offer a quicker and cheaper alternative to determination at an employment tribunal. Any proposals would be the subject of a consultation.
• Modifying the formulae for up-rating employment tribunal awards and statutory redundancy payments to round to the nearest pound. The Government says it anticipates this move will give a direct net saving to business of £5.4. million each year.

Vince Cable said:

“Our labour market is already one of the most flexible in the world. This flexibility benefits businesses, staff and the wider economy. But many employers still feel that employment law is a barrier to growing their business.

“We’re knocking down that barrier today - getting the state out of the way, making it easier for businesses to take on staff and improving the process for when staff have to be let go.

“But let me be clear: we are not re-balancing employment law simply in the direction of employers. Our proposals strike an appropriate balance and we are keeping the necessary protections already in place to protect employees. Our proposals are not - emphatically not – an attempt to give businesses an easy ride at the expense of their staff. Nor have we made a cynical choice to favour flexibility over fairness.

“We know that disputes at work cost time and money, reduce productivity and can distract employers from the day-to-day running of their business. Tribunals should be a last resort for workplace problems which is why we want disputes to be solved in other ways.”

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

Katja Hall, CBI Chief Policy Director, said: "The Government has listened to our concerns about how employment law is acting as a barrier to creating growth and jobs.

"We particularly welcome the changes to tribunals, including a rapid resolution scheme, which will allow faster justice for legitimate disputes.

"Proposals to introduce the protected conversations we have called for will allow employers and employees to have frank discussions about future plans, without fear of ending up in a tribunal.

"Businesses also want to see quick action to reduce the collective redundancy period to minimise uncertainty for staff and employers, and a review of the implementation of the Agency Workers' Directive.

 "With unemployment rising, we need to get on with these changes to give employers the confidence to hire."

However, TUC General Secretary Brendan Barber urged the Government to think again. He said:

“Reducing protection for people at work will not save or create a single job. It's not employment law that is holding firms back, it's the tough economic climate and the problems many companies are having getting the banks to lend to them that's to blame. Research from the OECD shows that there is no link between regulation and economic output - German employees have much more protection at work and their economy is the strongest in Europe.

“At a time when thousands of jobs are under threat as a result of the government's austerity programme, reducing the time that organisations have to consult with their employees whose jobs are at risk of redundancy flies in the face of good sense. The move will have little impact on the company but it will make a huge difference to staff worried about their futures, increasing their stress at what can be a hugely traumatic time.

“Although unions will welcome any moves to improve the chances of disputes being resolved within the workplace, the idea that every year employment tribunals are presented with lots of trivial claims is nonsense. Tribunals already have solid procedures for rooting out weak claims.

“Allowing conversations that happen at work over difficult issues like retirement or poor performance to take place but not permitting their record to be referred to in the future, should a case ever go to tribunal, is hugely worrying. This could simply provide the perfect cover for rogue bosses to bully at whim without fear of ever being found out.”

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