Vince Cable announces mass overhaul of employment law

In May 2010, the coalition government set out its commitment to review current employment law and the Tribunal system. The proposals were made in reaction to the business community telling the government that their biggest concern in taking on new staff is the current Employment Tribunal system. Businesses are claiming the current employment system is acting as a barrier to growth.

Mr Cable has said the government is committed to maintaining employment rights and protection against bullying and discrimination, but wants to "create an environment in which small businesses in particular can grow and expand, take on workers, without the hassle they often fear they encounter in tribunals".

The government believes that the reforms will benefit employers in the region of £40 million. The reforms will be aimed at allowing employers to dismiss large numbers of workers at once and allowing employers to have the chance to “speak their mind” to “underperforming” employees without fear of legal action .

 The main proposals are as follow:

1. To increase the unfair dismissal qualifying period from one to two years

2. All claims must be lodged through Acas, the conciliation service, before they can be lodged with the Employment Tribunal

3. To introduce fees for people planning to go to an Employment Tribunal

4. To introduce 'protected conversations', allowing employers to discuss frankly with staff matters such as poor performance or early retirement.

5. A call for evidence with a view to consult on reducing the minimum period of redundancy consultation. Under the proposals this period could fall to 30 days.

6. A Call for evidence no 'compensated no-fault dismissal' for small companies employing fewer than 10 staff.

7. An option for a 'rapid resolution scheme' which will enable simple claims to be settled within 3 months.

Last year there were 218,000 claims in the Employment Tribunal, a 44% rise from 2008. The Employment Tribunal grants an estimated £1billion per year in payouts. The government says each claim costs an employer an average of £4000 to defend.

The Trades Union Congress have hit back at the proposals. They have said that it is not employment law that is stopping businesses from taking workers on, it is the economic climate and lack of funding. The TUC believes that deregulation and reducing protection of employees will not create or save a single job.

Business leaders on the other hand have welcomed the changes and are pleased that the government listened to their concerns. They feel the proposals will simplify the system and will make Employment Law up to date and fit for purpose giving employers the confidence to hire.

To see the Government’s Response to the Consultation on Resolving Workplace Disputes, published this morning, please follow this link: http://www.bis.gov.uk/assets/biscore/employment-matters/docs/r/11-1365-resolving-workplace-disputes-government-response.pdf

For further information please contact the Employment team at Kitsons