23 November 2011

The most radical reform to the employment law system for decades...?

On Wednesday 23 November Vince Cable introduced the government’s response to the consultation on “Resolving Workplace Disputes” and to the ‘Red Tape Challenge’. In a wide-ranging speech he highlighted numerous areas of employment law that the coalition wants to change. In part the speech confirmed rumours that have been circulating for months, but anyone looking for a timetable for change will find few fixed points – as yet. Here we highlight the proposed changes, starting with those that are, Parliament permitting, almost definites, and ending with the “calls for evidence” that may, if the reactions are favourable, lead to consultation and firm proposals.

Things that will “definitely” happen

  • The qualifying period for protection from unfair dismissal will go up to two years in April 2012. No details were given on how the transition from one- to two-year qualification will be handled.
  • New Employment Tribunal Regulations are planned for April 2012. These will implement proposals to increase the maximum sums payable under costs orders and deposit orders, to scrap witness expenses and to allow for Judges to sit alone in unfair dismissal claims.
  • Mr Justice Underhill is to perform a “root and branch” review of Employment Tribunal rules and procedures. This may ultimately lead to new or strengthened case-management powers, particularly to strike out claims, if the government has its way.
  • “Early Conciliation” will be introduced. Claims will first have to be lodged with Acas, rather than a Tribunal. Although there will be no obligation to take part in the process, this is a significant psychological change if nothing more. The period for early consultation will end after either one month or when a party opts out. It is unclear how time limits for lodging claims to the tribunal will be affected by the proposal. Those who recall the statutory dispute resolution procedures might feel a shudder of alarm.

Things where there is a stated intention to consult

  • “Protected conversations” are to be the topic of a new year consultation. At first glance these look a bit like familiar “without prejudice” discussions save that they do not have the policy aim of settling a dispute without recourse to litigation. There is little detail on the mechanisms envisaged though: will they be optional (for both employer and employee), and how can one prevent their use as a cloak for abusive or bullying behaviour? It is suggested that discriminatory discussions will not be permitted under the ‘cloak’. An area ripe for dispute and satellite litigation suggests itself immediately.
  • Consultation on “Rapid resolution” of what are called “more straightforward” claims is also planned. Rapid resolution is envisaged as a scheme to provide quicker, cheaper, determinations in low value, straightforward claims (such as holiday pay) as an alternative to the current employment tribunal process. This could ultimately see claims settled without a hearing, and perhaps more controversially, by someone other than a Judge. Those who remember the ACAS Arbitration Scheme and other (under-utilised) ‘alternatives’ to litigation may think , ‘Have we been here before?’

Legislation in the offing?

Mr Cable’s speech also signalled further potential changes arising out of the Government’s recent ‘Red Tape Challenge’ and its ‘Resolving Workplace Disputes’ consultation, the responses to which were published today.

These include:

  • promoting greater use of compromise agreements and introducing a possible standard form agreement;
  • amending whistleblowing legislation to prevent employees ‘blowing the whistle’ about breaches of their own employment contracts;
  • confirming that the Government will be pressing ahead with the introduction of more flexible forms of parental leave and extending the right to request flexible working to all employees. These particular measures are described part of the effort at ‘helping people to find work and keep it’ – which one might be forgiven for finding difficult to reconcile with some of the other proposals in today’s announcements. Employers might also worry that these steps are likely to increase rather than decrease red tape.

Calls for evidence – TUPE and redundancy

In responding to the ‘Red Tape Challenge’ Mr Cable’s speech indicated that there would be ‘calls for evidence’ in two areas. This has been backed by the publication by BIS of formal Calls for Evidence on:

  • Collective redundancy consultation (to include the process, minimum consultation periods, ‘high impact’ redundancies and the overlap with TUPE legislation); and
  • TUPE (in particular the question of whether the Regulations are ‘gold plated)’.

The background of European law in both these areas will inhibit the Government’s ability to make sweeping changes, although the scope of the Calls to Evidence does not appear to take specific account of this.

In Withers’ view however, any adjustment of the TUPE Regulations in particular (which were themselves brought into force in 2006 after extensive and prolonged consultation), is likely to lead to more litigation rather than less.

Seeking views – compensated no fault dismissal

Back on the theme of ‘Reducing Workplace Disputes’, Mr Cable’s speech announced after much speculation the Government will consult on a proposal to introduce compensated no-fault dismissal for ‘micro firms’ ie those with fewer than 10 employees. At this stage this is a proposal and no more. The Government may discover in the process of consultation that deciding whether a firm has 10 or fewer employees is not as easy as it looks.

If you wish to respond to the Calls For Evidence these can be found by clicking here and here.

If you wish to discuss the proposals please contact Meriel Schindler or your usual Withers contact.


Category: Article