Streamlining confirmed for employment laws, designed to boost business

The Department for Business, Innovation and Skills announced today new steps to give firms greater flexibility and confidence in managing their staff, and also to reduce the burden of red tape for businesses. The changes, which echo proposals announced earlier this year, are most likely to benefit small businesses.

It should be said that there are no new revelations today, but more a confirmation of announcements which have already been made by Vince Cable, Business Secretary.

The Coalition Government details:

  • its’ support for “settlement agreements” which will supersede “compromise agreements” which are designed to end employment relationships in a consensual and equitable way. Today begins a consultation period on how these agreements will work, and in addition ACAS will be drafting a new code of practice in light of these changes;
  • how it might limit the compensation payments awarded for unfair dismissal claims. The two proposals are a cap of up to 12 months pay and a new, reduced upper limit;
  • the streamlining of employment tribunals to empower judges to dismiss weak or vexatious cases;
  • its’ understanding that businesses want the TUPE rules to be more efficient, and a consultation will take place before the end of 2012;
  • recommendations on how ACAS can work better for small businesses.

The proposals for “compensated no-fault dismissals” have also been shelved indefinitely, which were initially suggested by the controversial Beecroft report and slammed by Vince Cable, have been shelved indefinitely.

The OECD considers that the UK has a lightly regulated, flexible labour market which is attractive to businesses, third only to USA and Canada.

Business Secretary Vince Cable said:  “We have been looking across the range of employment laws with a view to making it easier for firms to hire staff while protecting basic labour rights.

“Our starting point is that Britain already has very flexible labour markets. That is why well over one million new private sector jobs have been created in the last two years, even when the economy has been flatlining.  But we acknowledge that more can be done to help small companies by reducing the burden of employment tribunals, which we are reforming, and moving to less confrontational dispute resolutions through settlement agreements.”

The Government is making a raft of changes to employment legislation, and is likely to implement around 80% of the report published by Adrian Beecroft. The period for eligibility for unfair dismissal has been doubled from one year to two, there will be different ways of resolving disputes other than going to an employment tribunal, a universal Criminal Records Bureau check and taking away the default retirement age.

Tom Street of commented on today’s announcement: “It doesn’t look like there is anything startlingly fresh or ground-breaking today but a rehash of what we already knew. It does seem that the Government is trying to have its’ cake and eat it, which you would expect:  they want to better protect employers to help fuel the economy, but at the same time they want to be seen to be providing greater reassurance for employees in the midst of a recession. This is always going to be a difficult balance, and we have yet to see the detail of the proposals.

“I am sure that our clients will welcome any attempt to streamline the employment dispute and tribunal process, and we are already noticing an upturn in requests for information on negotiated settlements. If the two parties to a claim have a reasonable approach, a settlement can usually be arrived at. We are well-versed in negotiating these for our clients, often at the last minute before a scheduled tribunal appearance.”