Reforms to job laws to help business
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Issued
on 23 November 2011 - BIS
The most radical reform to the employment law system for
decades was outlined today by Business Secretary Vince Cable as part of
the Government’s plan for growth, cutting unnecessary demands on
business while safeguarding workers’ rights.
During a speech to EEF, the manufacturers organisation, Dr
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
retain key protections for employees, but also fundamentally improve
the way employers take people on, manage disputes and let people go.
Changes will include an overhaul of employment tribunals, which is
expected to 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 is restricting
businesses and should be reduced.
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.”
In response to the
suggestion that dismissal laws are too onerous for small businesses in
particular, the Government will launch a call for evidence on two
proposals.
Firstly it will seek views on
a proposal to introduce compensated no fault dismissal for
micro firms, with fewer than 10 employees. Secondly, it will look at
ways to slim down existing dismissal processes, how they might be
simplified, including potentially working with the Advisory,
Conciliation and Arbitration Service (Acas) to make changes to their
Code, or supplementary guidance for small businesses.
Simplifying the employment
tribunals system for businesses will result in fewer claims each year.
These reforms will deliver direct net savings to business of more than
£10 million a year with wider benefits to employers estimated at more
than £40 million a year.
Proposals resulting from the
Red Tape Challenge include a call for evidence on the consultation
rules for collective redundancies and whether the current 90 day
minimum period for more than 100 redundancies can be reduced. Ministers
are keen to see what impact this has on the restructuring of
businesses, whether this acts as a barrier to employer flexibility in
the labour market and how any change might affect employees’ access to
alternative employment or training.
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 proposals will transfer
the cost burden from taxpayers to users of the system and encourage
claimants to consider seriously the validity of their claim. 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, over 40 per cent, are to
be merged, simplified or scrapped. The Government will:
• Publish a call for
evidence on proposals to simplify the Transfer of Undertakings
(Protection of Employment) - TUPE - rules which many businesses say are
too complex and bureaucratic.
• 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 which will simplify the current regime,
making it easier for employers to navigate the law, to complement the
work the Low Pay Commission is doing on how best to streamline the
system.
• 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. These policy changes are being led by the Home Office.
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’. A compromise agreement is a type of employment
contract, which means when the working relationship has broken down to
an irretrievable status, employees receive a negotiated financial sum
to end their contract, and agree to not bring further claims against
their employer.
• 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. We anticipate that the reduction in
redundancy pay and subsequent reduction in associated compensation
payments made in employment tribunals will have a direct net saving to
business of £5.4. million each year.
Some of these changes will
require the Government to introduce primary legislation, subject to the
Parliamentary timetable.
Notes
1. A copy of Vince Cable’s speech can be found at www.bis.gov.uk
2. The Government response to the ‘Resolving Workplace
Disputes’ consultation can be found at http://www.bis.gov.uk/Consultations/resolving-workplace-disputes.
The ‘Resolving Workplace Disputes’ consultation was launched on the 27
January and closed on 20 April.
3. The Calls for Evidence on collective redundancies
consultations and TUPE can be found at
http://www.bis.gov.uk/assets/biscore/employment-matters/docs/c/11-1371-call-for-evidence-collective-redundancies
and
http://www.bis.gov.uk/assets/biscore/employment-matters/docs/c/11-1376-call-for-evidence-effectiveness-of-tupe-regulations
They will end on 31 January 2012.
4. The spotlight for the Red Tape Challenge ran from 10
October to 31 October. Of the 159 regulations in the employment theme
over 70 regulations (over 40%) are to be merged, simplified or scrapped.
5. There were 218,000 tribunal claims in 2010-11, a rise of
44% since 2008-09, with each business spending nearly £4,000 per claim
on average defending itself. There is an additional average cost of a
£1,900 to the taxpayer per claim.
6. From April 2012 witness statements will be taken as read,
expenses are to be withdrawn for witnesses and judges are to sit alone
for unfair dismissal claims – all of which are designed to lower costs
and speed up tribunal claims.
7. In addition, the maximum level for cost awards to
businesses in winning a vexatious tribunal claim is to rise from
£10,000 to £20,000. Deposit order amounts for claimants, when a judge
determines that a part of claim in unmerited, will rise from £500 to
£1,000.
8. Currently only a small number of employees with a potential
claim contact Acas. Of those that do, and are referred into pre-claim
conciliation (PCC), less than 30% go on to lodge Tribunal claims.
Effectively extending pre-claim conciliation to all potential claimants
could offer significant savings to employers through early resolution,
and may help discourage speculative, weak or vexatious claims
9. The terms of reference for Mr Justice Underhill’s review
can be found at
http://www.bis.gov.uk/assets/biscore/employment-matters/docs/t/11-1379-terms-for-review-employment-tribunal-rules.
Mr Justice Underhill will present his findings to Ministers next year.
10. The Employment Law Review is a Parliament long review
looking at all aspects of employment law and is part of the
Government's plans to deliver growth by breaking down barriers,
boosting opportunities and creating the right conditions for businesses
to start up and thrive. Since the review was announced last summer the
Government has:
o launched an Employer’s Charter that reassures employers
about what they can already do to deal with staff issues in the
workplace
o launched a review of the compliance and enforcement regimes
for employment law, with the aim of streamlining the system removed the
Default Retirement Age, thus removing significant paperwork obligations
for employers and bringing wider benefits to the economy, making it
easier for older people to continue working
o commissioned an independent review jointly with DWP (from
David Frost and Dame Carol Black) of the system for managing sickness
absence
o repealed the planned extension of the right to request
flexible working to parents of 17 year olds
o decided not to bring forward the dual discrimination
provision in the Equality Act
o not extended the right to request time to train to companies
with fewer than 250 staff.
11. A recently published labour market discussion paper
entitled, ‘Flexible, effective, fair: Promoting economic
growth through a strong and efficient labour market,’ can be
found at
http://www.bis.gov.uk/assets/biscore/employment-matters/docs/F/11-1308-flexible-effective-fair-labour-market
About the Author
© Crown Copyright. Material taken from the BIS Department for Business, Innovation and Skills. Reproduced under the terms and conditions of the Click-Use Licence.
