Employment Law – what happened in 2012?

When everyone least expected it, 2012 became a dizzyingly busy year for employment legislation.

There were periods over the last twelve months where at every turn there was a new government proposal, consultation process or amendment to employment legislation.

The Department for Business, Innovation and Skills, headed up by Vince Cable, Liberal Democrat Business Secretary, has been pushing forward employment legislation to inject growth into the UK economy and to avoid continued stagnation. No-one wants to be another Japan.

We will endeavour here to summarise some of the key issues in 2012, which are also likely to have an ongoing impact in 2013 for employers and employees.

Unfair Dismissal: The qualifying period for claiming unfair dismissal increased from one year to two years, as of 6 April 2012. One of the objectives of this change was to reduce the pressure on an increasingly over-burdened employment tribunal system, but concerns were raised that disgruntled employees might find a way of circumventing the two-year rule. Notably the employee might bring a claim for discrimination instead. On one hand, employers would have more confidence in taking on new staff, but conversely trade unions argued that the legislation put young people and women at a disadvantage, as these demographics were less likely to accrue the two years’ service needed.

Beecroft: In May 2012, the government published the controversial Beecroft report which had been commissioned by the Department for Business, Innovation and Skills in an attempt to reduce red tape and identify areas of employment law which would be simplified to accelerate growth. The report was drafted by the venture capitalist and Tory donor Adrian Beecroft, and the report covered “compensated no-fault dismissals”, exemptions for micro-businesses, tribunal efficiency, flexible parental leave, discrimination law, TUPE changes, redundancies and pensions. It was a wide-ranging report, and although the headlines were all about Vince Cable calling some of the plans (notably the no-fault dismissals) as “bonkers”, in the 9 months since the report many of Beecroft’s proposals have in fact been brought in directly or indirectly by the coalition government. Perhaps the Lib Dems doth protest too much?

Enterprise and Regulatory Reform Bill: Shortly after the Beecroft report was published, Vince Cable and his team announced the Enterprise and Regulatory Reform Bill, designed to make the UK “one of the most enterprise-friendly countries in the world”. The bill proposed modifications to the employment tribunal system, allowing shareholders to vote on executive pay, and the tweaking of “Compromise” Agreements into “Settlement” Agreements. The bill also proposed a cap on compensatory awards within the employment tribunal system.

Employment Tribunal Fees: It had been mooted for some time, but finally in July the Ministry of Justice set out its proposal for introducing fees within the employment tribunal system, likely to commence in Summer 2013. With an £84m bill met by the taxpayer for employment claims, in an age of austerity claimants will be expected to pay a fair contribution towards the system they are using. It is proposed that fees will be charged for bringing a claim as well as going to tribunal, and likely to range from £160 to £950.

Equality Act Revisions: The Government confirmed its intention not to implement certain elements of the Equality Act 2010, which brought all UK discrimination legislation into one place. Harassment by Third Parties was on the danger list, along with Discrimination Questionnaires and recommendations by Employment Tribunals.

Flexible parental leave: The Government announced its intention to introduce a system which would allow fathers to take time off work and claim benefits if the mother chose to return to employment. With family-friendly policies a priority of the Coalition, there were some in the Government concerned that already struggling businesses should not be burdened with uncertainty regarding their male employees.

Equal Pay Ruling: The Supreme Court decision in a landmark equal pay case involving Birmingham City Council set tongues wagging in employment and HR circles. Equal pay claims should normally be made through an Employment Tribunal within six months of the claimant leaving their job. However the judgment came down from the Supreme Court that equal pay claims can be brought through the civil court system for up to six years. Industry commentators remarked that this was likely to bring a wave of equal pay claims, but that this increase in potential claimants would be tempered by the cost of using the civil court as opposed to the far cheaper employment tribunals.

Consultation on Flexible Working for All: Proposals for this were first mooted in the Modern Workplace Consultation in 2011, with the right to request flexible working to be extended to all employees from 2014. It is widely expected there will be a responsibility for employers to deal with requests for flexible working in a reasonable manner and timeframe, and that employees will need to be able to show 6 months continuous service before being allowed to make such a request. Controversially (given the desire not to strangle small businesses with red tape) micro-businesses will not be exempt. Likely to benefit employees with children who want a more flexible working pattern, the reality for employers is that they will still be able to refuse the request for “business” reasons, so there may be a lot of smoke and mirrors around this proposal and relatively little substance.

Employee-Shareholder Status Contracts: This appears not to be the brainchild of the Beecroft report but an element of the Growth and Infrastructure Bill which was passed in December 2012. Following a consultation on this issue there appears to be relatively little appetite for employees to become minority shareholders in their employer’s business, but the Government seems keen to plough on regardless. The basic tenet is that employers could offer their staff shares in the business in exchange for waiving some of their employment rights, thus offering greater protection for the employer. It seems that only a very small minority of employees and employers would be interested and runs the risk of offering a tax loophole for canny senior employees. However further detail is expected in 2013 so we wait to see the fine print.

All in all 2012 has proved to be perhaps one of the most exciting years for new employment legislation, with rafts of new proposals all (in theory) designed to boost the economy and stimulate growth. We expect further clarification and the launch of several of these initiatives in 2013.