Welcome to this week’s Discuss HR, the HR blog written for and by members of Human Resources UK.
Our HRUKLI events kicked off this week with an incredibly talkative group in Bristol! There was an awful lot of networking and fun had by all, so thank you to everyone for attending. Later today we have the Wootton Bassett event, which promises to be even bigger and better!
So to the blog, this week we welcome our latest guest writer and solicitor Louise Taft. Louise gives us her view on the recent changes to employment regulation. (Ed Scrivener)
Vince Cable’s “new” proposals to streamline employment law and boost business
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Employment law was all over the news again on Friday after a much hyped press release setting out proposals for changes to employment regulation. After waiting with bated breath well beyond the advertised time of 9.30am, employment lawyers found themselves looking at some very familiar proposals. Those proposals are:
- Greater use of settlement agreements, with proposals for an ACAS code of practice
- A reduction in the cap on unfair dismissal compensation
- Streamlining Employment Tribunals, making it easier for Judges to dismissal weak cases
- Consulting on changes to TUPE
- Recommending improved guidance for small businesses on the ACAS code of practice on discipline and grievances
My immediate reaction was that I had heard it all before. Indeed, the proposals on settlement agreements and the unfair dismissal cap were made in the Enterprise and Regulatory Reform Bill back in May. News organisations were then more interested in the leaked Beecroft report advocating no fault dismissal, which BIS has now confirmed will not be pursued. Instead, it is suggested that the settlement agreement proposals will improve employer confidence and improved guidance on the ACAS code will reduce the fear of regulation.
It is my long held view that fear of employment regulation does far more damage to business confidence than the regulation itself. I am increasingly frustrated that BIS and employer organisations champion reform by claiming that employment law is a constraint on business. This only fuels the fear of regulation, dissuading small businesses from expanding by taking on new staff when those fears are rarely genuine.
Whenever I have explained the rules on unfair dismissal to an employer, they are struck by how simple it sounds: act reasonably, give your employee the chance to improve their performance/behaviour (except where there is gross misconduct) and don’t take disciplinary action without first giving an employee a fair chance to state their case. More guidance on the ACAS code is a sensible suggestion and should, if drafted in plain English, help small businesses to understand what they can and cannot do. It is important that businesses understand that they can sack underperforming employees provided they give them opportunity to improve.
Friday’s announcement was followed by 2 separate consultations, one on “ending the employment relationship” on the use of settlement agreements and unfair dismissal compensation and one on the Employment Tribunal rules.
Settlement agreements are of course merely compromise agreements by another name. Whether or not the proposed standard form will reduce legal costs will depend entirely on the quality of that standard form. If it is badly drafted, legal advisors will suggest amendments, which may increase rather than reduce costs.
The proposed “protected conversations” have more holes than a string vest and could lead to years of satellite litigation. They will only be “protected” in unfair dismissal proceedings, not claims for discrimination or automatic unfair dismissal. Our advice will be to proceed, as now, on the basis that it is possible a settlement offer will be referred to in Tribunal proceedings so employers must be careful in what they say when making an offer.
There has been much debate over a cut in the maximum compensation available for unfair dismissal. In reality, this will take effect in only a minority of claims. In 2010/2011, the median award was only £4,591. The Impact Assessment accompanying the consultations states that 94% of awards between 2005/06 and 2010/11 were below £30000 and 98% were below £50000. Higher earners are likely to negotiate longer notice periods, allowing them to bring higher value breach of contract claims if their employment is terminated. Other than generating headlines, the impact of any change is likely to be minimal.
Employment lawyers were also aware of the fundamental review of Employment Tribunal rules finalised by Mr Justice Underhill back in June. This recommended several changes to streamline the process, including several designed to make it easier to strike out weak cases, hold shorter hearings and give greater powers to order costs. These proposed changes are sensible and will hopefully go some way to free up the overworked Tribunal system to give resources to realistic claims with a prospect of success.
We were also well aware of the call for evidence on the impact of TUPE, which closed as long ago as February. The announcement doesn’t set out any changes but promises a consultation later in the year. The major issue is of course that TUPE legislation is governed by European law, making changes difficult. I suspect the reason we haven’t seen anything thus far is that BIS are struggling to identify how changes can be made that don’t fall foul of European case law.
So in short, Friday’s press release will not herald an employment law revolution. If you want to have your say on the consulations, you can do so here. Otherwise, keep an eye on progress of the Enterprise and Regulatory Reform Bill.
About the author:
Louise Taft qualified in 2002 and has spent the past 10 years dealing with Employment Tribunal claims on behalf of both Claimants and Respondents. She has a particular interest in claims involving Discrimination and Whistleblowing. She also has experience in the Employment Appeal Tribunal and Court of Appeal. Louise has appeared as an advocate in the Employment Tribunal on many occasions and as such applies her knowledge of the practice of the Tribunals to ensure that cases are effectively prepared for hearing. She gives clients the best possible advice as to when it is appropriate to settle a case and at what level. Most importantly, her experience of Tribunals informs her advice to employers as to how to deal with employee issues so as to avoid claims.
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Discuss HR is the blog for Human Resources UK, the leading LinkedIn group for those involved with HR in the UK. Next week’s Discuss HR will be written by experienced HR professional Sheena McLullich.
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