Cable announces Employment Law reform proposals

Wednesday 19 September 2012

Last week, the Business Secretary Vince Cable announced his proposals to reform UK employment law.

Employment law reform has been a hot topic for some months, especially since the controversial Beecroft Report was published earlier this year. The Government continues to look for ways of encouraging growth by giving employers the power to deal with underperforming employees without fear of Employment Tribunal proceedings, but at the same time protecting the rights of employees from unscrupulous employers.

The Government has stated that it wants to reduce the red tape that comes with employing staff and deal with dismissal by moving to a less confrontational style of employment dispute resolution.

Easing the burden on the Employment Tribunal system is a key aim so introducing new measures to ensure that straightforward cases are resolved informally before Tribunal proceedings are contemplated is a major factor.

Some of the changes proposed by Vince Cable include:
• The introduction of settlement agreements to encourage employers and employees to resolve disputes at an early stage and avoid the need to go to the Employment Tribunal.
• Reducing the cap for compensation for successful unfair dismissal claims in the Employment Tribunal from £72,300.
• Increasing the case management powers of Employment Judges to enable them to dismiss weak cases early in the Employment Tribunal process.
• Simplifying TUPE legislation to make the process easier for all parties to understand and comply with.

Several consultations have been launched to look at the feasibility of these proposals in more detail.

However, one of the most controversial proposals contained in the notorious Beecroft Report will not be introduced. Beecroft originally called for the introduction of “no fault dismissals” for micro-firms. After consulting on this proposal, the Government has decided not to take it forward due to a lack of support for instant dismissals, something which will prove to be a popular decision amongst those groups representing employees.

These proposed changes come on the back of earlier reforms introduced by the Coalition such as fees in the Employment Tribunal and increasing the time an employee must work continuously before they are eligible to claim unfair dismissal from one year to two years.

Whilst some see these proposals as necessary to encourage small businesses to hire more staff, others see them potentially taking yet more rights away from employees and leaving them open to abuse and exploitation. It remains to be seen as to whether the Government’s latest proposals will have the desired effect of creating a more flexible workforce whilst balancing the interests of both the employee and employer – we will have to wait until the outcome of the various consultations.