The Government
has today announced the next steps in its comprehensive review of
employment laws.
New plans to improve the way in which workplace disputes are
resolved have been published alongside an “Employer’s Charter” –
the measures are designed to give businesses more confidence to
take on workers and support growth.
Tribunal claims rose to 236,000 last year – a record figure and a
rise of 56 per cent on 2009 – and business has to spend almost
£4,000 on average to defend itself against a claim. Concerns have
been raised by businesses that the system has become too costly,
takes too much time, places unnecessary strains on small
businesses and that it is too easy to make unmerited or vexatious
claims.
Prime Minister David Cameron said:
"A critical element of the Government's growth
strategy is to create the conditions which allow businesses,
especially smaller businesses, to flourish and expand, by reducing
regulation and maintaining a flexible and dynamic labour market.
“Today's announcements on reforms to employment law are
among the first conclusions of our government-wide growth review,
and highlight our determination to ensure that employment law is
no longer seen as a barrier to growth, while making sure that
employees and employers are treated fairly.
“Giving businesses the confidence to take on somebody new will be
a real boost to the economy, and help generate the sustainable
growth we need."
Business Secretary Vince Cable said:
“Disputes in the workplace cost time and money, can affect
morale, reduce productivity and hold back businesses. We often
hear that knife-edge decisions about whether to hire new staff can
be swung by concerns about ending up in an employment tribunal if
things don’t work out. Today’s proposals address these concerns
and should help give employers more confidence.”
“But let’s be clear – resolving disputes earlier is also in the
interests of workers. No one wants to spend month after month
worrying about a claim – we need to make what can be an extremely
stressful time in people’s lives as short as possible.”
“In the business world there is also a common misconception that
employment protections are all one-way - towards the employee. The
Charter we are publishing today tackles this myth by setting out
clearly some of the most important rights that employers already
have in the workplace.”
The Government wants to enable workplace disputes to be resolved
as early and as easily as possible. The key proposals set out in a
consultation published today are:
Giving businesses greater confidence to hire new staff by
increasing the qualifying period for employees to be able to bring
a claim for unfair dismissal from one to two years - this will
also ultimately reduce the number of disputes that go to
Employment Tribunals;
Encouraging parties to resolve disputes between themselves as
early as possible – requiring all claims to be lodged with Acas
(Advisory, Conciliation and Arbitration Service) in the first
instance to allow pre-claim conciliation to be offered. This also
includes introducing settlement offers to encourage parties to
make reasonable offers of settlement to avoid Tribunal hearings
and encouraging parties to consider other forms of early dispute
resolution such as mediation;
Speeding up the tribunal process – extending the jurisdictions
wherejudges would sit alone to include unfair dismissal,
introducing the use of legal officers to deal with certain case
management functions and taking witness statements as read. This
will result in Employment Tribunal resources being used more
efficiently and allow cases to be listed and heard more quickly,
saving time and cost; and
Tackling weak and vexatious claims – providing the Employment
Tribunals with a range of more flexible case management powers so
that weaker cases can be dealt with in a way that does not mean
disproportionate costs for employers.
There is also a commitment for the Ministry of Justice to consult
separately on introducing fees for Employment Tribunal cases and
appeals, to ensure that users contribute towards the cost of
running the system.
Justice Secretary Kenneth Clarke said:
"It's in everyone's interests -
employers, employees and taxpayers - to have a dispute resolution
system that is efficient, simple to use and supports the
employment relationship.
"We have heard clear calls from users for reform to the
Employment Tribunal system, particularly the need to ensure robust
powers and procedures are in place to deal with claims more
efficiently, more effectively and - importantly - more
proportionately.
"So I will be working closely with colleagues across
Government to get this package of proposals implemented as quickly
as possible, and I will also be consulting separately later in the
year on the detail of introducing fees for Employment Tribunal
cases, to ensure that people who use the system contribute towards
its cost."
The consultation document also includes proposals to:
Increase the provision of information – aimed at reducing
speculative claims, this would require more information on the
nature of the claim being made and to include a statement of loss.
It will help parties to decide whether to agree a settlement offer
or proceed to a Tribunal hearing;
Withdraw the payment of expenses - encouraging parties to either
settle earlier or reduce the number of witnesses they call; and,
Introduce financial penalties for employers found to have
breached rights – aimed at encouraging greater compliance from
employers and thus a reduction in the number of Tribunal cases.
The intention of the Charter is to raise awareness and give
clarity amongst employers on what they can and can’t do when
managing their staff and covers a wide range of employment law issues.
The employment law review is taking a comprehensive look at
employment legislation across government. In the next few months,
we will consider the requirements on employers when they take on
staff to ensure that it is as simple and straightforward as
possible. As part of this, we intend to publish a model contract
for employers shortly.
Notes to editors:
The joint BIS and Tribunals Service consultation document can be
found here -
http://www.bis.gov.uk/assets/biscore/employment-matters/docs/r/11-511-resolving-workplace-disputes-consultation
and will run from the 27 January to 20 April 2011. The Employer’s
Charter can be found here -
www.businesslink.gov.uk/employerscharter. The Ministry of Justice
propose to consult on how best to implement a fees mechanism in
the spring of 2011.Currently only a small number of workplace
disputes result in a potential claim contact via Acas. Of those
that are referred into pre-claim conciliation (PCC), less than 30%
go on to become Tribunal claims. Effectively extending PCC to all
potential claimants could offer significant savings to employers
through early resolution, and by identifying speculative, weak and
vexatious claims.Under proposals in the consultation a judge will
be able to issue a deposit order at any stage of the proceedings
and will make the deposit order test more flexible.Formalising
offers to settle will develop a process for allowing offers of
settlement to be lodged with the Employment Tribunal if they are
rejected by the party. In the event that the Employment Tribunal
subsequently makes a less favourable award, then there is a
mechanism for recognising the additional costs incurred by the
other party in proceeding to hearing. This is similar to the
system that operates in the civil courts (under part 36 of the
Civil Procedural Rules), but the differences in the way Employment
Tribunals operate present some challenges, including attaching a
financial value to the non-financial elements of a remedy (such as
an apology or a reference).Initial estimates show that increasing
qualification periods for unfair dismissal from one to two years
would result in 3,700 to 4,700 fewer Employment Tribunal cases per
year. The proposal would not affect the so-called "day
one" rights against unfair dismissal, such as on grounds
of discrimination.BIS has estimated that employers face average
costs of £3,800 per case with an average additional cost to the
taxpayer of £1,900. Alongside other proposed changes to the
Employment Tribunal system, the Government is also taking the
opportunity to consider some changes to the way in which certain
Employment Tribunal awards and other payments under employment
rights legislation are revised each year. Included in the
consultation are proposals for witness statements will also be
taken as read.Upon taking office, the Government started a
fundamental review of employment law so that it properly balances
the needs of employers and employees, and provides the competitive
environment required for businesses to thrive.A key part of the
Government’s growth strategy is to create the right conditions
that allow businesses, particularly small and medium enterprises,
to grow and expand by reducing regulation and maintaining a
flexible and dynamic labour market. The Growth Review will report
by Budget 2011 http://www.bis.gov.uk/growth.BIS' 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:
Betty Nwosu
Phone: 020 7261 8849
betty.nwosu@coi.gsi.gov.uk
Henry Tanner
Phone: 020 7215 5947
henry.tanner@bis.gsi.gov.uk