Reforming Employment Relations

In a speech entitled “Reforming Employment Relations” given this morning to the Engineering Employers’ Federation in London, the Business Secretary Vince Cable set out the Government’s plans to radically reform employment relations. Mr Cable outlined two objectives – to safeguard workers’ rights, while deregulating to “reduce the onerous and unnecessary demands on businesses”. The plans have been published in the Government’s “Response to the Consultation on Resolving Workplace Disputes”. The consultation closed earlier this year.

The speech by Mr Cable confirms George Osborne’s announcement at the Conservative Party conference in early October, reported in our last Employment Law e-shot, that the qualifying period for unfair dismissal will be increased from one year to two years, starting in April 2012. Further proposed reforms include the compulsory lodging of all claims through the conciliation organisation ACAS for an attempt at mediation, before they can be lodged with the Tribunal, and a consultation on the introduction of fees for lodging a Tribunal claim.

It is also proposed that Employment Judges will sit alone in unfair dismissal cases. A fundamental review of Employment Tribunal rules of procedure is planned, which will include changes to costs and deposit orders. The Business Secretary has said that simplifying the Tribunals system will result in fewer claims, delivering direct net savings to business of more than £10 million a year. Wider benefits to employers are estimated at more than £40 million a year.

Among the remainder of the proposals are options for a ‘rapid resolution scheme’ which would enable simple claims to be settled within 3 months. Other proposals, intended to safeguard workers’ rights, include financial penalties on employers who breach employment rights, consultation on the introduction of ‘protected conversations’ and the modernisation of maternity and paternity leave allowing greater involvement for fathers.

In October the Government initiated the “Red Tape Challenge” which examined 159 regulations. More than 70 regulations are to be merged, simplified or scrapped. The most significant proposal is to publish a call for evidence on proposals to simplify TUPE 2006 which protect employees when the identity of their employer changes. Many businesses view TUPE as too complex and bureaucratic.

Two weeks ago the national newspapers were alive with the unintended disclosure of the Beecroft report on unfair dismissal. The report caused controversy with its suggestion that the concept of unfair dismissal should be abolished and replaced with “compensated no-fault dismissal” for ‘micro firms’ (those with less than 10 employees). In his speech Vince Cable suggests that the Government will seek views on the implications of no-fault dismissals for businesses.

 

Businesses should continue to look out for news on the progress of the proposals announced today. Some of the proposals will require the Government to pass primary legislation. In the short-term it is unlikely the Government will legislate to make the concept of no fault dismissal a reality. Trade Union bosses have already voiced their disapproval and such a radical departure from a key part of Employment Law will require a lengthy consultation period. In the longer-term it seems that the Government is intent on making it easier for employers to dismiss under-performing staff and provide employers with greater protection against Tribunal claims, as it explores ways to cut what it perceives to be a regulatory burden on employers. Watch this space and we will come back to you with any further developments on these issues.