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 ona 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 to editors:
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
12. BIS's online newsroom contains the latest press
notices, speeches, as well as video and images for download. It
also features an up to date list of BIS press office contacts. See
http://www.bis.gov.uk/newsroom for more information.
Contacts:
BIS Press Office
NDS.BIS@coi.gsi.gov.uk
Nic Fearon-Low
Phone: 020 7215 5078
nic.fearonlow@bis.gsi.gov.uk