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Rumours & Red Tape

03 November 2011 #Employment

They say a week is a long time in politics.  Last week was testament to that, with a number of stories circulating in the press which, if true, will have an impact on current employment laws.  Headlines included plans to scrap unfair dismissal law, the possibility of having “protected conversations” with staff without the risk of litigation, as well as calls to repatriate powers on employment regulation from the EU back to the UK.  

Can we ignore these headlines or do we need to brace ourselves for yet more changes?

Scrapping unfair dismissal law

This was probably the most headline grabbing report.  The Telegraph published a leaked Downing Street report calling for unfair dismissal law to be scrapped so that employers can sack underperforming workers more easily.  The report, commissioned by the Prime Minister, came from Adrian Beecroft, a venture capitalist and Conservative Party donor.

The report examines what it describes as the “terrible impact of the current unfair dismissal rules” which it sees as undermining economic growth and the competitiveness of UK businesses.  It says that British workers should be banned from claiming unfair dismissal so that firms and public sector bodies can find more capable replacements, rather than employing staff who simply “coast along”.  It claims unfair dismissal laws stifle the expansion of industry as companies are fearful of recruiting “unknown quantities” who are impossible to sack.

Mr Beecroft`s report also argues that the unfair dismissal law is particularly abused by some in the public sector.

Downing Street has denied any plans to abolish unfair dismissal laws.  At this stage, these radical proposals seem unlikely to become law and no formal consultation process has commenced.

Red Tape Challenge

The Government is however, committed to reforming employment laws. 

Back in March, at the same time as the Budget, a document called Plan for Growth was published, which contained proposals to reduce regulation for business, with the aim of boosting economic growth.  This was followed in April by the Government’s launch of its “Red Tape Challenge”; a project aimed at identifying current regulations that could be scrapped, merged, simplified or improved.  This involves a review of over 21,000 regulations, with members of the public and businesses commenting on the regulations in question.  Once the opportunity to comment has closed, the relevant Government department will be called up to justify the continued existence of the regulation.

The Red Tape Challenge website was launched on 7 April 2011 and groups the regulations into themes, with employment law being one of these.  The employment law phase was launched at the beginning of October for three weeks (it ended on 19 October).  At the same time BIS published a discussion paper posing questions on how management can be improved, how the “fear factor” in recruitment can be reduced and which employment rights are “fundamental”.  It also seeks examples of particularly burdensome regulations.

Employment tribunal reform

There are certain changes to employment law that we do know are going ahead.  On 3 October 2011, the Chancellor, George Osborne, announced in his speech at the Conservative Party conference that the qualifying service for unfair dismissal will increase from one year to two years.  This change will take effect in April 2012.

Many employers may welcome this change as it gives them more management flexibility.   It may also make them keener to take on new staff, if they have more time to weed out underperforming workers. The more cynical commentators, however, have suggested that Claimants will simply bring other, potentially more costly claims, which don’t require a qualifying period of employment.  For example, discrimination, health and safety or whistle-blowing claims.

The second proposed change, expected to come into effect in December 2013, may have a greater impact.  The plan is for Claimants to have to pay a fee if they want to bring a claim in the Tribunal (although people on low incomes will not have to pay a fee).  Reports suggest that it will cost £250 to enter a claim, a further £1,000 once the claim has been listed for a hearing, with higher fees if the claim exceeds £30,000.  This change may discourage the more spurious claims. A consultation on tribunal fees is expected to commence later this month.

We are still waiting for the response to the Government’s consultation on tribunal reform which commenced in January this year, entitled Resolving Workplace Disputes: A Consultation. Consultation closed on 20 April 2011.  Proposals included: 

  • Introducing compulsory pre-claim Acas conciliation
  • Wider powers to strike out a claim or order payment of a deposit
  • Raising the limit on costs awards from £10,000 to £20,000 
  • Employers who lose at tribunal to pay a fine of up to £5,000 to the Exchequer.

Protected conversations

Last week, the Deputy Prime Minister, Nick Clegg, announced that he wanted employers to be able to ask older staff about their performance and retirement plans, without the threat of litigation, by being able to have “protected conversations”.  Plans for this are sketchy.  However, it is understood that the Minister for Employment Relations, Consumer and Postal Affairs, Ed Davey, is drawing up proposals to allow this to happen.  Watch this space.

EU wranglings

Also last week, backbenchers were demanding a referendum on Britain’s membership of the EU.  At the same time, the Government was making calls to repatriate powers on employment regulation back to the UK. 

Whilst withdrawal from the EU is highly unlikely, and the repatriation of certain powers looks slim, certain aspects of membership are being reviewed by Whitehall.  In particular, it has been reported that David Cameron wants an opt-out from parts of the Working Time Directive in return for any treaty change required to help rescue the Euro.  Meanwhile, Michael Gove, the Education Secretary, commented that he wants the UK to win back powers from the EU which regulate “whom we can hire, how we can hire and how long they work”.

Any attempts to repatriate powers from the EU are likely to cause a rift in the coalition, with Nick Clegg confirming that the Liberal Democrats would not back such attempts.

So all we can do is watch and wait.  If you’re really keen to have a say, check out the above links to the relevant Government website pages to find out more, or simply post a comment on our website at the end of this article.

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.
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