The Most Radical Employment Law Reforms for Decades? Or a Spectacular Own-Goal?

There have been many excellent blogs, articles and podcasts on the government’s proposals for the “most radical reform to the employment law system for decades” contained in its “Resolving Workplace Disputes: Government Response to the Consultation” Here is my regrettably belated contribution to the debate.

The full review can be read by clicking the link, but if you don’t want to wade through all 55 pages of the report, here are the headlines. Vince Cable, the Business Secretary also added in some further proposals in a later speech.

Much of what has been suggested is still subject to further consultation and “calls for evidence”, thus extending the consultation process even longer.

It is proposed that the following reforms, billed as the most radical changes to employment law ever seen, will be introduced;

1. The qualification period for unfair dismissal claims will be increased from the current one to two years from April 2012, supposedly to increase business confidence and stimulate the economy
2. Compromise Agreements will be renamed “Settlement Agreements” and a “standard text” will be developed to streamline them.
3.  Employment Tribunals to be given a discretionary power to impose a financial penalty on employers that breach employment laws, based on the amount of the Tribunal award and be between a minimum of £100 and a maximum of £5,000. The award will be paid to the government not the employee.
4. All claims to be lodged with ACAS to enable the parties to settle the dispute through conciliation.  Only if the conciliation is unsuccessful or is refused will the claim be able to proceed to a Tribunal.
5. It is also proposed that a system of “protected conversations” will be introduced allowing employer and employee to discuss problems in the employment relationship without fear of the discussion being used against them later on in Tribunal proceedings.  The government will consult on this next year.
6. The government will consult on introducing fees for tribunal claims and also upon listing a case for a final hearing.
7. Tribunal procedure to be modernized and the current President of the EAT (Mr Justice Underhill) will be asked to carry out a fundamental review of the Employment Tribunals Rules of Procedure to make them less unwieldy, to be presented next year. Employment Judges will sit alone in Unfair Dismissal cases. The maximum limit on Deposit Orders will be increased from £500 to £1000 and the maximum amount of costs orders will be doubled to £20,000.
8. There will be a consultation on a new system of rapid resolution for low value, simple, disputes that may be “paper only” (ie without a need for oral hearings, judges – or lawyers?).
9. The ACAS Code of Practice on Disciplinary and Grievance procedures to be reviewed with a view to simplifying the current dismissal processes.
10. Compensated No Fault Dismissals to be considered for firms with fewer than 10 employees.
11.  The government is calling for evidence on whether the TUPE legislation can be simplified, as it is perceived that it “gold-plates” the European Regulations that gave rise to TUPE. The call for evidence opened on 23^rd November and continues to 31 January 2012.
12. There is also a call for evidence on whether the law on collective redundancies be reviewed, to shorten the length of consultation periods.
13. The “loophole” in whistleblowing cases created by the case of Parkin v Sodexho (which allowed employees to claim that breach of their own employment contracts was an event capable of giving rise to a “Protected Disclosure”) is to be abolished.
14. Criminal Records Bureau (CRB) checks are to be made portable between employers.
15. The law on the National Minimum Wage will be merged and simplified.
16. Maternity Leave/Flexible Working – to be modernized and made more responsive to parents’ needs but without costing business more.
17. The recently introduced Agency Workers Regulations are to be reviewed in 18 months time.

Some of these proposals are to be welcomed (such as the reform ofwhistleblowing legislation), some may never see the light of day (is the government really going to impose what will come to be seen as a tax on firms that breach allegedly too onerous red tape?) and some are badly misconceived.

For instance the problem with Tribunals is the inefficiency of their administration rather than the rules governing them. They already have the power to impose costs against a party acting unreasonably, but rarely exercise it.    Introducing fees for Claimants may or may not discourage spurious claims but it will certainly prevent those people on lower incomes with genuine claims from being able to access justice.  Why not make more use of Deposit orders?

I have thought for a while that there is a deeper agenda here.  The Courts and Tribunal systems have been merged, ET rules of procedure have been moving towards the Civil Procedure Rules in tone and substance for some time, and now unfair dismissal cases will be heard by a single Judge alone.  As Darren Newman writing in November’s Employers Law said “The fact is that the current employment tribunal system is just not geared up to do  this [collect and refund fees] and considerable extra resource and training would be required to put it in place“.  Agreed, but that doesn’t need to be an issue if you have a full and complete merger between the two systems.

The emphasis on mediation/conciliation is to be welcomed, but will ACAS be adequately resourced to do the massive job the government intends to ask it to do?  Has the government considered how much it is asking ACAS to do? Conciliation is a process that takes time and skill and requires both sides to be reasonable.  Forcing people to mediate is not a solution: the participants must want to do so.  As a firm we spend 90% of our time trying to resolve disputes and only 10% actually in court, which is probably representative of most employment lawyers.

The last government tried to reform disciplinary and grievance procedures with some very strict procedural rules, which only led to more cost and delay for all parties.  Subsequently they had to be repealed and substantially amended five years later. What might appear at first glance to be a sensible idea (e.g protected conversations) will need to be very carefully drafted if they are not to bog employers and employees down in lots of procedural arguments.

The proposal to exempt micro-businesses from employment law is worth a cautious welcome because a Tribunal case or litigation can destroy a small business, but how will a small firm be defined? Micro firms will not be exempted from discrimination laws so it is worth asking to what extent this reform would improve the lot of micro firms.

There is still much consultation and talking to be done before we know the outcome of these proposals.  Some will probably not come into force, but will allow the government to present itself as having the interests of the business community at heart, nevertheless.  Others, such as the increase in the unfair dismissal limit are very unwelcome, will damage careers and will probably make life harder for employers because employees will seek to bring discrimination claims instead.

In trying to polish its pro-business credentials the government is in danger of introducing steps that have no demonstrable economic benefits, will make solving disputes potentially much harder and will be seen as significantly restricting many of the poorest and most vulnerable in society from gaining access to justice. This may well be billed as the most radical reform of the  employment system for decades, but that doesn’t prevent it from being a massive own-goal as well.

Links to Some of the Articles, Blogs and Podcast I’ve enjoyed  reading on the subject

Stephen Levinson – New Law Journal

XPert HR’s podcast

Daniel Barnett’s search for the best Employment Law Joke