• All Change for Employment Law?
  • November 25, 2011
  • Law Firm: SNR Denton - Chicago Office
  • On 23 November 2011, Vince Cable set out the Government’s plans to radically reform employment relations and the tribunal system. The Government has published its Response to the Consultation on Resolving Workplace Disputes (the Response). The consultation closed on 20 April 2011 and the long-awaited Response contains the Government's plans for reform.

    Some proposals have already been the subject of press reports and leaked stories, while others are new. The Government's stated aim is to hack through excessive red tape, rather than giving businesses an easy ride. But employers will certainly welcome some of the changes. The main proposals of particular interest are set out below.

    • As widely reported already, the unfair dismissal qualification period will be extended from one to two years on 6 April 2012. However, the Government has revised down its estimated decrease in tribunal claims because of this amendment (though it does not agree that discrimination claims will increase). No doubt foreseeing potential indirect discrimination challenges to this change, the Response explicitly states that it considers the change to be a proportionate means of achieving a legitimate aim.
    • The Government intends that several procedural changes will also take effect next April. These include that tribunal judges will be able to hear unfair dismissal cases sitting alone and witness statements will normally be taken as read. This should speed up cases coming to hearing and the time taken to hear them.
    • An amendment to s.147 of the Equality Act to confirm that compromise agreements (now to be called settlement agreements) may be used to settle discrimination claims. The Government will consider how it can develop a standard text for settlement agreements. This will bring welcome clarity to this area. The Government will also consult on enabling settlement agreements to cover future claims, as well as those in existence at the time, and to do so by a blanket waiver (rather than a full list).
    • Employment judges will have a discretion to impose a financial penalty on employers who have breached employment rights (although employers should not be penalised for accidental errors). The payment will be half the amount of the award (subject to a minimum of £100 and a maximum of £5,000) and will be payable to the Exchequer. Cynics might see this measure as revenue-generating rather than red-tape reducing!
    • Employees will no longer be able to bring whistle-blowing claims because of a breach of their own employment contracts. This is good news for employers and re-focuses the whistle-blowing legislation back to genuine public interest disclosures, which was the original purpose.
    • The outgoing president of the EAT, Mr Justice Underhill, will lead a fundamental review of the Employment Tribunal Rules of Procedure. However:
      • Secondary legislation to increase the limits for cost awards (from £10,000 to £20,000) and deposit orders (from £500 to £1,000) will be implemented immediately.
      • Early conciliation will be the first part of the tribunal process. All potential claims will have to be lodged with ACAS first to offer the opportunity for early conciliation. Whether this is effective will depend to a large extent on whether ACAS has the resources to conciliate quickly.
      • A “Calderbank” model (where claimants suffer costs penalties if they refuse reasonable settlement offers which exceed the compensation eventually awarded) will not be introduced at this stage but one will be considered if other reforms are ineffective.
    • A consultation will be launched on introducing a system of “protected conversations” to allow open and frank discussions without the existence of formal disputes. We expect this to receive popular support from employers. It removes the risk that currently surrounds this type of conversation. It will not, however, extend to protecting discriminatory acts.
    • The Government will also consider whether it can introduce an alternative to the current tribunal process for low-value straightforward claims such as holiday pay, a so-called “Rapid Resolution” scheme. The aim is that these claims would not require a hearing and therefore should be quicker and lower cost.
    • The Government wants to give businesses access to mediation in a low-risk, low-cost environment. A pilot scheme in the retail sector is to be launched to explore how mediation experience can be shared with others in the supply chain. A further regional pilot will be launched to explore how mediation networks might provide low-cost mediation in their area.
    • There will be a call for evidence on TUPE to assess the effectiveness of the regulations. While the Government accepts that the regulations implement EU law, it is concerned that TUPE is gold-plated and unnecessarily bureaucratic. Questions include whether the inclusion of the service provision changes reduces the burden on business. Other areas of interest focus on the ability to harmonise changes after transfer and the application of TUPE to different managerial levels within a business. Responses are due by 31 January 2012. Should the balance of evidence call for a change, there will be a formal consultation on any specific changes in 2012.
    • There is a further call for evidence on collective redundancies. The main areas for consideration are:
      • reducing the minimum time period for consultation when 100 or more employees are at risk from 90 to 60, 45 or 30 days; and
      • addressing a lack of clarity around when consultation periods should start and end and the definition of “establishment”.

    Again, responses are required by 31 January 2012.

    • Consultation on introducing fees for tribunal claims will be published shortly by the Ministry of Justice. There will be two choices. The first will involve payment to lodge a claim, the second will involve payment to take a claim to a hearing. There will be a remissions system for those who need help but no details of how this will be managed are yet available. Previous leaked information has suggested fees of £250 for lodging a claim and £1,000 at the hearing (with adjustments for claims for over £30,000). The fee proposals will be controversial but employers should benefit from this attempt to dissuade unmeritorious claimants.
    • The CRB system will change and this should greatly simplify recruitment for employers. It is intended that CRB checks will be available online from 2013 and will be kept up to date for a small fee.
    • Flexible working will be extended and the maternity/paternity regime will be modernised to allow fathers to spend more time with their children.

    Taken together these proposals mark some significant changes to a wide variety of existing employment law issues. Many will be welcomed by employers, but not all are guaranteed to make it through the calls for evidence and consultation. We will keep you in touch with developments throughout 2012.