Blocks employment specialist comments on government proposals

October 2, 2012 11:53 am Published by

Employment law can be confusing. I mean is there is too much red tape or not? Employers say they’re bound up in the stuff like an Egyptian mummy and the government agrees and sets up the “Red Tape Challenge”. But then the government boasts, in a press release, that “the UK has a lightly regulated, flexible labour market that the OECD considers to be amongst the best in the world, behind only USA and Canada. The recent World Economic Forum Global Competitiveness Report cited the flexibility of the UK’s labour market as one of the main reasons for its improvement in the global rankings to 8th from 10th”. Has the mummy escaped?

Now Vince Cable has announced another set of proposals designed to speed up the process of dismissing employees. He has abandoned the idea of ‘no fault’ compensated dismissals where an employer could have just fired someone by handing over money and waving goodbye for no particular reason. I will hold my hand up and say that this is a relief. We are, after all, in the 21st, not the 19th century.

A rather more sensible proposal is to encourage increased use of settlement agreements to help end employment relationships in a fair way with the consent of both parties. A consultation on how best to make this work in practice has started and Acas has agreed to provide a new code of practice on this. These agreements already exist as ‘Compromise Agreements’ which provide a sum of money to the employee in return for a promise not to bring a claim in the Employment Tribunal for, say, unfair dismissal. The government wants to streamline this process but there will still be the protection for the employee of legal advice. With the proper safeguards in place this is a practical proposal which should help businesses and employees alike but, in truth, this type of agreement is already widely used.

The government plans also to streamline employment tribunals by allowing judges to sift out weak claims, which may relieve businesses of having to pay for legal advice and representation against a Claimant who has a hopeless case. For those bringing a claim, the sift is an extra hurdle to overcome.

So the pendulum swings towards the employer and continues to do so with another proposal designed, frankly, to deter people from enforcing their employment law rights. We already know that from next April unhappy employees will have to pay fees to bring claims in the Employment Tribunals. The government is now suggesting that, if the ex-employee wins an unfair dismissal claim, the maximum award they can get should be reduced. At present a winning Claimant can receive up to £72,300 in compensation. Under the proposals the award will either be ‘capped’ at a sum equivalent to the individual’s 12 months’ pay or at a reduced overall upper limit. Those employed after April this year will already have to work for two years with the same employer before earning the right to bring an unfair dismissal claim. The cumulative effect of all these government measures will be either to spawn a whole series of imaginative claims that do not involve unfair dismissal or to radically reduce the number of claims made to employment tribunals because few are eligible or can afford it.

Finally TUPE – the regulations protecting staff who transfer from one business to another during a sale, takeover or change of contractor. The legislation and case law on TUPE is notoriously complicated and the government wants to make it more efficient. Even lawyers sometimes yearn for a simpler life and would welcome clearer and smoother TUPE transfers. Best of luck Vince!

The above is general comment only. For specific advice contact Sallie Davies, Employment Solicitor at Blocks Solicitors on 01473 230033

Categorised in:

This post was written by blocks_admin