Government shake up of Employment Law

After many months of rumour, Business Secretary Vince Cable has announced the government's proposals for what could be the biggest shake up of employment law for decades.  

In this article, Christopher Martin and Andrew Weir of NorthgateArinso Employer Services consider each of the proposals and put forward their thoughts on whether there will be benefits for employers should these proposals pass through Parliament.

The main proposals are:- 

• To increase the qualifying period for unfair dismissal two years

Andrew comments this may well see an increase in more complex litigation involving discriminatory elements which do not have the service requirement attached to them.

The reason for this is there are presently routes to presenting Unfair Dismissal complaints without the necessary service requirement, such as lodging claims that an employee’s dismissal was motivated through discrimination, or that an employee was dismissed for blowing the whistle.

This will remain the case when the new two year service requirement takes effect and we may well see an increase in these types of claims following 1 April 2012.

These types of claim are generally far more complex for employers to deal with than a standard unfair dismissal complaint and generally require multiple day full merits hearings to be resolved, with the financial penalties for employers (should their defence fail) being uncapped.

As a result, cases such as these generally result in heavy reliance on external legal support, since without that support, employers can have difficulty understanding how to respond to the presented claim(s).

Of course, there will always be claims like these lodged that have little or no prospects for success.

Where a dismissal motivated by alleged discrimination is claimed, the difficulty for employers and the Employment Tribunal service is identifying those weak claims at an early stage, without the need for hearing evidence.

Indeed, dealing with a claim that a dismissal was motivated by alleged discrimination without evidence being heard is generally the rare exception rather than the rule, so of course it follows where settlement is not achievable, a case like this will almost certainly result in a full Employment Tribunal hearing.

• That all claims must be lodged with ACAS before the Employment Tribunal service to allow for an attempt at mediation first

Christopher is somewhat sceptical that the above proposal of all claims having to be lodged through ACAS will in fact become a reality due to lack of funding. The present proposal states that the extra cost will come from the savings generated by reducing the amount of claims to the Tribunal, rather than there actually being an increase in headline funding.

Additionally, for hard pressed businesses concentrating on ensuring profitability, it adds an extra procedural layer to an already complex and time consuming process. 

• The introduction of consultation around “protected conversations” which will not extend to discriminatory acts

We are entirely unclear how “protected conversations” will indeed be protected.  Even if there were a mechanism for this, tactically employees will very likely look to introduce some of the points raised through that “protected” forum in an open meeting, which defeats the object of the protectionism concept.

In practice, these will again lead to an extra dimension in the management of employees and will provide no protection for employers who make discriminatory remarks. Indeed, with discrimination law being driven by European legislation it is clear that once an employee alleges discriminatory remarks were made in these conversations they can quite easily be brought into proceedings and the government may even be found to be improperly implementing European laws.

Other proposals, which have not been previously discussed in the press: 

• The introduction of an option for a 'rapid resolution scheme', to enable simple claims to be settled within three months 

In principal the concept behind this is sound, however this triaging of claims, which is what this amounts to, will result in administratively complex proceedings at the Tribunal offices themselves, which are already straining at the seams with a single point of entry. It is highly likely that new forms will have to be developed to ensure that such rapid resolution claims are processed in the correct way.

• An amendment to s147 of Equality Act 2010, to clarify compromise agreements can be used to settle discrimination claims and consideration of how a standard text for compromise agreements could be reached for all employers, 

The discrimination clarification will certainly benefit employers, however in terms of a standard text for compromise agreements, the immense challenge the government will have is pulling the many hundreds of variants of Compromise Agreements into one version fit for all employers.  Having said that, if the government is able to get to a standard text for compromise agreements, negotiations in order to reach agreement, requires an understanding of the issues in dispute, the legal principals which support those issues and careful consideration of an employer’s likely financial exposure if an employee did litigate. 

• Complaints about breach of an employment contract to be removed from the whistle blowing law, 

This is wonderful news for employers.  Whistle blowing cases are ordinarily complex pieces of litigation proving very costly for employers, not least of which in terms of their management time. 

• Financial penalties to be introduced payable to the Exchequer by employers who breach employment rights, these payments to be subject to a discretion exercisable by Employment Judges, 

Employers need to protect themselves from these penalties and have access to robust, sound legal advice from the likes of NorthgateArinso Employer Services. 

• A fundamental review of employment tribunal rules of procedure, to be led by Mr Justice Underhill outgoing President of the Employment Appeal Tribunal to include changes to costs and deposit orders, 

All too often claims progress to a full hearing when they should, quite rightly, be heard at a Preliminary Hearing (or Pre Hearing Review) and be dismissed because they have no chance of winning, or ask the Claimant to pay a fee as a condition of his claim continuing.  We are hopeful that a revision of these rules by Mr Justice Underhill will give Employment Judges more robust powers to progress more matters to the Preliminary stage.  That said, what is key to this for employers is being able to identify those types of weak cases at an early stage and making the correct applications to the Tribunal.

• Employment Judges to sit alone in unfair dismissal cases, 

If this proposal is introduced, other than reducing the burden on the public purse and getting cases heard sooner than they would if a case were heard before an Employment Tribunal panel, we don’t see this having far reaching benefits for employers.  

What should be of concern to employers is that Employment Judges will lose the benefit their lay members bring to the Employment Tribunal process in giving Employment Judges the benefit of their hands on industrial relations or labour relations experience.  With this in mind, we feel it is important employers are able to satisfy themselves that their defence should be heard by an Employment Judge sitting alone and if not, robustly challenge that suggestion. 

• CRB checks to be portable, so no need for a fresh application when moving jobs, 

This will be helpful; however there is always that uncertainty in an employee receiving a clear CRB check, which subsequently becomes tainted.

• Maternity and paternity leave to be 'modernised', with emphasis on greater involvement for fathers, 

While this may be easy to manage for employers who employ both mother and father, for those who only employ one part of a couple it will be complex and time consuming to administer. We fail to see how this process can actually pass the recent “Red Tape” challenge raised by the government and believe it will only further add to the management burden of employing members of staff. 

• The government has said it is still looking at the option of compensated no-fault dismissals for micro-businesses (but it is not publishing any proposals at this time).  

The option of compensated no-fault dismissals for micro-businesses may in fact have an opposite effect to it’s intended aim, causing those businesses to be less attractive to prospective employees, since the employees who join those organisations will likely have very little employment protection.

All these proposals mean a significant period of upheaval for businesses in the way they manage employees and while such change is not necessarily a bad thing, there are always concerns that during transitional periods employers could quite easily fall foul of new and complex legislation, resulting in accidentally having to defend an Employment Tribunal. 

If you are in any doubt, please contact the NorthgateArinso Employer Services Advice Line where up to date and trained employment specialists can guide you through such changes and any other employment issues you may face along the way.