News - UK

UK - May 2012

Employment law changes announced

The Government has published its detailed proposals for employment law reform in the new Enterprise and Regulatory Reform Bill.

The Proposals

These are broadly split into three areas:

Employment Tribunal reform

  • Claims in the ET will be subject to a mandatory period of conciliation through ACAS before they can be progressed. It is not clear yet whether this is all claims over which the ET has jurisdiction or only some.
  • The introduction of "legal officers" to hear certain types of case but only if both parties agree.
  • Cases in the Employment Appeals Tribunal will generally be heard by a judge alone.

Changes to awards

  • Power to the Government to limit unfair dismissal awards to
    (i)   between median national earnings (approximately £26,000 currently) and three times that figure; or
    (ii)   one year’s earnings
  • power for the ET to impose a penalty on employers of 50% of any award with a minimum of £100 and a maximum of £5,000 where there are "aggravating features".

Whistleblowing

Here the Government proposes an amendment to make it a requirement that, in addition to the existing requirements that need to be satisfied before an individual can claim the protection of having made a "protected disclosure" it must also be shown that the disclosure was made "in the public interest". No further assistance is given as to the meaning of this term and so presumably it will be left to ETs to define its scope.

Commentary

Business leaders have been calling for some time for changes to make the ET system more efficient. The requirement to submit all claims to ACAS should in theory mean that some at least will be settled at that stage with very little connected additional cost. ACAS, however, has limited resources at present and, without further funding to increase those, it may be that this change will be of little practical effect.

Similarly the proposed changes to awards may not make much practical difference. With national median earnings at £26,000, that would place a maximum on awards of £78,000 which is a little more than at present. This would only apply to unfair dismissal - discrimination awards will continue to be uncapped.

The Bill does not deal at all with the controversial proposals set out in the Beecroft Report which has attracted a good deal of attention, mostly over the idea that unfair dismissal rights should be removed for those who work in small businesses. With the Coalition Government seemingly divided over this it remains to be seen whether these will be progressed. We will report any further developments as they arise.

Resources

Enterprise and Regulatory Reform Bill

Beecroft Report

For further information or to discuss the issues raised, please contact David Widdowson or Stephen Wright on +44 20 3051 5711.