The Business Secretary has denied fostering a climate in which workers will fear for their jobs in the wake of a proposed big shake up of current employment law.
During a speech to manufacturers’ organisation, the EEF, in London today, Vince Cable announced a call for evidence on whether the 90-day minimum consultation period for collective redundancies of more than 100 should be reduced.
He also said that ministers would seek views on how best to streamline existing dismissal processes and whether the Coalition Government should introduce a right to ‘compensated no fault dismissal’ for small firms with less than 10 staff.
The Ministry of Justice also plans to publish a consultation on introducing initial fees for anyone wanting to lodge a claim with an employment tribunal as well as a second fee of up to £30,000 to take that claim to a hearing.
While Cable acknowledged that the UK’s labour market was already one of the most “flexible” in the world, he said that many employers still felt that existing employment law acted as a barrier to growth. “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 when staff have to be let go,” he attested.
But this proposed “re-balancing” of employment legislation was “not – emphatically not – an attempt to give businesses an easy ride at the expense of their staff,” Cable claimed. “Nor have we made a cynical choice to favour flexibility over fairness,” he added.
In a bid to prove his point, he told BBC Radio 4’s Today programme that he had ruled out the more “controversial” ideas such as no-fault dismissals laid out in the recommendations made to Number 10 by private equity boss Adrian Beecroft last month.
However, there are plans to:
- Publish a call for evidence on proposals to simplify TUPE regulations
- Close a loophole in case law that enables staff to blow the whistle on their own personal work contracts
- Merge 17 National Minimum Wage regulations
- Launch a consultation next spring to streamline the recruitment sector’s current regulatory regime
- Devise a means for employers to view Criminal Records Bureau checks online by 2013.
In response to its ‘Resolving Workplace Disputes’ consultation, the Government has also committed to:
- Require all parties involved in an employment dispute to go to ACAS for pre-claim conciliation before they can go to a tribunal
- Double the qualification period for unfair dismissal claims to two years
- Publish a consultation in the New Year on ‘protected conversations’
- Appoint Mr Justice Underhill to lead an independent review of existing tribunal procedures in order to establish whether they are fit-for-purpose
- Further consult on simplifying compromise agreements, which will be renamed ‘settlement agreements’
- Consult on a ‘rapid resolution’ scheme to try and speed up and cut the costs of resolving tribunal claims
- Modify the formulae for up-rating tribunal awards and statutory redundancy payments that round them to the nearest pound in a bid to save businesses net of £5.4 million each year.
Legal verdict
Adrian Hoggarth, head of employment law at law firm Prolegal, gives his verdict on some of the key Government proposals:
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1. Simplifying the Transfer of Undertakings (Protection of Employment) Regulations 2006
The Government speaks of its concern that businesses think TUPE grants ‘gold-plated’ rights. There is no doubt that this is the case. I strongly believe that TUPE goes far beyond what the European Directive envisages in ringfencing or ‘gold-plating’ terms following a transfer.
It is ludicrous that employers and employees are not able freely to agree post-transfer changes to terms of employment. There was an opportunity to clarify this in 2006, but it wasn’t taken. If anything, the current position is even less clear than it was before. The Government’s call for evidence is a step in the right direction, but I am not convinced that it will go far enough.
In relation to TUPE in insolvency situations, we have to hope that the Government is prepared to listen to employment and insolvency practitioners. The current TUPE regulations are a ‘cut and paste’ job from the European legislation and are completely unhelpful in UK insolvency situations.
Businesses in financial trouble are currently left with the uncertainty of not knowing when certain parts of the TUPE regulations will apply. The provisions are supposed to support a ‘rescue culture’, but are currently a hindrance to businesses trying to survive.
2. ‘Protected conversations’ to allow employers to have discussions with staff about retirement or poor performance that could not be relied on in a tribunal claim
Since the abolition of the Default Retirement Age, employers have been left in fear of discussing retirement plans with their employees because of the possibility that such discussions could be used against them in an employment tribunal. Businesses cannot function effectively with this level of uncertainty, and it was a situation that had to change. The Government’s proposal is an important recognition of the need for common sense in employment legislation.
2. Increasing the qualifying period for unfair dismissal to two years from April 2012
The increase in the qualifying period for unfair dismissal will reduce the number of employment tribunal claims faced by businesses and encourage hiring in the short-term. But it is unlikely to have a positive impact on jobs overall. It is equally likely that the number of staff being fired will also increase as fewer employees will benefit from unfair dismissal protection. While this might be a useful short-term fix, it is no long-term solution to unemployment.
Such activity may also be discriminatory. In the past, a two-year qualifying period for unfair dismissal claims was challenged under sex discrimination legislation because the impact on women was greater. The TUC says that 60% of young people have been in their job for less than two years so a similar challenge could now arise under age discrimination laws.
3. Removing protection for whistleblowing that relates to a worker’s own contract
Since the Employment Appeal Tribunal’s decision in Parkins v Sodexho Ltd 2002 IRLR 109, breach or likely breach of an employment contract by an employer has been a matter about which disclosures are potentially protected. Proposing to remove protection is an important development and is no doubt intended to tie in with the Government’s proposal to change the qualifying period for unfair dismissal to two years.
Employees often use this loophole to get around the unfair dismissal qualifying period and employment lawyers have been anticipating a surge in whistleblowing claims based on breach of an employee’s own contract in light of doubling the qualifying period. Workers and their advisers will need to be even more creative in framing their cases, and a rise in weak discrimination claims is to be expected.
4. Introducing employment tribunal fees
Two options are being proposed. The first would require individuals to pay an initial fee to lodge a claim, then a second fee to proceed to a hearing. The second option would require those seeking an award above £30,000 to pay more to bring a claim.
The introduction of employment tribunal fees will have a significant impact on the number of claims made. A £250 up-front fee would deter a lot of claimants as would a £1,000 fee payable when the main hearing is listed.
While business needs to be relieved of some of the burden of employment tribunal claims, this should only apply if claims lack merit. A system of tribunal fees, especially ones set at such high levels, will have a greater impact on those without the funds to bring claims than those who bring speculative or vexatious claims.
This is a huge shift in policy. It comes against the backdrop of a tribunal system that has always bent over backwards to assist claimants who cannot afford to pay for legal advice. To introduce fees at the levels suggested would be a significant deterrent to claimants, and the worry is that it will act as a barrier to individuals with legitimate claims who simply cannot afford to take the financial risk.
A fairer system would be one that targets claims without merit rather than the claims of those who cannot afford to enforce their legal rights.
One Response
Analysis of Tribunal Figures
The Fullfact website (fullfact.org/factchecks/employment_tribunals_reform_vince_cable-3137) has an interesting deconstruction of the claims that tribunals have risen by 44% in the last two years. Examining the Ministry of Justice bulletin on the figures Fullfact agree there has indeed been a spike but that this is largely due to recording of multiple cases against single employers; e.g. numerous cases brought against the airline industry repeated every three months.
Heard Vince Cable on the Today programme and can’t say I was convinced his heart was in it. Really not sure there is any real need to change the legislation and perhaps more could be done in other areas to encourage growth?