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Employment Law Reforms - Expert Comments

David Reid
22nd Nov 2011

Employment law reform has recently become a hot topic for the mainstream political media in a way that perhaps we have not seen since the 1970s. The reforms to unfair dismissal law and tribunal procedure proposed by the coalition last week are set to have a significant impact on employment rights for employers and employees alike.

 

Below we summarise the main reforms and proposals for consultation that have been announced.

 

Unfair Dismissal Qualifying Period

It has now been confirmed that the current one year qualifying period for the right to claim unfair dismissal will be extended to two years with effect from 6 April 2012. It remains to be seen whether employees who have more than one but less than two years’ service at that date will continue to enjoy the protection they have already accrued, but commonsense suggests that should be the case.

 

Employment Tribunal Fees

The government is also pressing ahead with consultation on the introduction of fees for individuals bringing Employment Tribunal claims. The level of fee and how it should be paid remains to be seen, but the level of fee may depend on the value of the claim or the requirement for a hearing. It is expected that the fee will be refunded if the Claimant wins.

 

Whilst the increase in the qualifying period for unfair dismissal is unlikely to have a profound effect on the overall number of claims being presented to Employment Tribunals, the introduction of fees for claimants would perhaps be the most radical change to tribunal procedure since the system was set up in the early 1970s. It is difficult to imagine that such a scheme would not significantly reduce the number of claims being presented. One can question whether such a move would leave employees with adequate access to justice to enforce their employment rights, but one cannot deny its potential effectiveness in reducing both the cost burden and administrative burden on the Employment Tribunal system.

 

Protected Conversations

The government is also consulting on a proposal to allow employers to have ‘protected conversations’ with employees, to discuss issues such as poor performance or retirement. The content of such a conversation would not be able to be relied on by the employee in any subsequent tribunal proceedings.

 

This concept may be a difficult one to introduce into law in an easily workable manner, as European law will require rights under its anti-discrimination directives not to be infringed by such conversations. Any such law may also sit uncomfortably with implied terms of the contract of employment such as the employer’s duty to maintain the employee’s trust and confidence.

 

Compensated No Fault Dismissal

Perhaps the most controversial proposal outlined in Vince Cable’s speech is the opening of a consultation on the idea that for small businesses with 10 employees or less, the right of employees to make an ordinary unfair dismissal claim would not apply on termination of employment. Instead, the employer would be able to make a payment equivalent to a statutory redundancy payment and would have no liability to the employee for unfair dismissal.

 

Whilst there are clearly real difficulties for small businesses in complying with unfair dismissal legislation, there is likely to be a great deal of resistance to the idea that the extent of your employment rights would depend on the size of the employer you worked for.

 

Employment tribunals are already able to excuse lapses in procedure where the employer’s size and administrative resources are limited, but effectively saying that small employers would no longer have to have a fair reason for dismissing an employee would certainly be a substantial departure from the traditional UK unfair dismissal model.

 

Other Reforms

Further consultations on reforms have been announced in relation to the Transfer of Undertakings (Protection of Employment) Regulations (TUPE Regulations) and collective redundancy consultation periods. In the latter case, it is proposed that the minimum period between the start of collective consultation and the first dismissal taking effect where 100 or more redundancies are contemplated could be reduced from 90 days to 60, 45 or even 30 days.

 

In the case of the TUPE Regulations, it is worth noting that the government has already questioned whether these regulations should continue to provide rights to UK employees beyond those conferred by the European Directive under which the regulations were made. This means that the UK concept of a ‘service provision change’ under the TUPE Regulations, which has undoubtedly simplified the law but made it much harder for incoming contractors to avoid acquiring the employees of the outgoing contractor, could be a casualty of any move towards stripping away the ‘gold-plating’ of European Directives.

 

Finally, the government has confirmed that its previously announced a proposal to require all claimants to take their claim to ACAS for conciliation before they proceed to lodge a claim with the Employment Tribunal will go ahead. This is likely to come into force in 2013.

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