Employment law proposals

Unemployment rates are at their highest since the summer of 1994. The OECD (Organisation for Economic Co-operation and Development) has warned that the UK could be entering another period of recession and further predicted rising unemployment.

The Government’s recent proposals to overhaul the employment law framework was intended to go some way to addressing the above situation. Vince Cable in a speech given on the 23 November 2011 advised that flexible labour markets are an essential part of a successful economy. Therefore, it is important that employers have the confidence to take on new workers and create jobs, so that ultimately more people can obtain a foot on the employment ladder.

The Government has confirmed that it intends to introduce the following measure:

• Qualification Period – The qualification period for the right to claim unfair dismissal will be increased from 1 to 2 years. The logic behind this move is to give employers more confidence to recruit new employees.

The Department for Business, Innovation and Skills (BIS) has suggested that the increased qualifying period for unfair dismissal claims will only apply to those starting a new job after the 6 April 2012.

Thus employees whose employment started before are likely to remain subject to the 1 year qualifying period before they can claim unfair dismissal.

• ACAS – All claimants will be obliged to submit their claims to ACAS in order to allow an opportunity to resolve their dispute through conciliation.

• Protected Conversation – This will allow employers to raise issues such as poor performance/retirement without the worry that such conversations will subsequently used as evidence at a tribunal hearing. Further detail will be consulted in due course.

• Compromise Agreements – There will be consultation on simplifying the process of compromise agreements, which allow parties to agree a non-fault settlement in an exchange for an agreement not to bring future claims against the employer.

• Rapid Resolution Scheme – This is a proposed scheme that will attempt to provide a quicker, cheaper alternative to a tribunal hearing in straightforward cases. Some early thoughts would be for an independent legal expert to reach a decision based solely on written evidence. The Government has advised that the matter will be subject to a full public consultation before any decisions are made.

• Review the Tribunal System – Justice Underhill, the old head of the Employment Appeals Tribunal, has been asked to review the whole of the tribunal system, with a view to modernise and ensuring the system meets the needs of an economy looking to recover and grow.

• Fees – There will be a consultation on the introduction of fees for the claimant with the hope that this will encourage a claimant to fully consider the merits of their case before bringing a tribunal claim. The fee system is expected to take effect from April 2013.

• Penalty – There may be the introduction of a financial penalty payable to the exchequer for employers found to have breached employment rights. This penalty will range from £100 - £5,000.

Employers may rejoice in that the proposals, on the whole, seem to favour them. However, Vince Cable has warned “Our proposals are not – emphatically not – an attempt to give business an easy ride at the expense of their staff”.

It remains to be seen what effect the proposed reforms will have in practice.  But, for the time being employers should not depart from the current employment law framework when taking action against employees.