2013 is shaping up to be an interesting one from an employment law perspective, particularly as the Government hopes that a number of its proposals for deregulating and modernising employment relations will come to fruition during the year. In this month’s Update, we summarise the key changes to watch out for.

Although 2012 promised significant legislative change, relatively little was actually delivered. The main change came in April when the qualifying period for unfair dismissal claims increased from one to two years, although it is widely anticipated that this is unlikely to lead to any significant change in the total number of employment tribunal claims either this year or next. Whilst unfair dismissal claims may reduce as a result, there is likely to be a corresponding increase in claims which do not have a qualifying period such as discrimination.

The Government appears keen to increase the pace of employment law reform in 2013. To achieve this aim, an ambitious legislative reform timetable includes the following:

  • Introduction of “employee shareholder” employment contracts where, in return for shares, employees will give up certain rights including unfair dismissal and statutory redundancy pay (April);
  • Reduction in the collective redundancy consultation period from 90 to 45 days (where 100 or more employees are involved) (April);
  • Introduction of early conciliation requiring Claimants to consider whether they wish Acas to assist the parties in achieving settlement before they can issue a claim (Summer); and
  • Imposition of fees for bringing employment tribunal claims (Summer).

In addition to legislative reform already tabled for this year, the Government has also issued a number of consultations looking to make further changes to employment law in the following areas:

  • Settlement agreements and statutory code of practice – these provisions, and the accompanying guidance, will cover pre-termination settlement offers, which will be deemed inadmissible in most unfair dismissal claims. The Government’s intention is to provide clarity and simplify the existing “without prejudice” approach to terminations. However, these provisions are limited and there are uncertainties about how they will apply in practice. The concern is that these changes will provide opportunities for further disputes, rather than solving them. Consultation closes on 9 April 2013.
  • Proposed changes to TUPE – in response to business concerns that the service provision change (SPC) provisions may have anti-competitive effects and had not clarified the law as intended, the Government is proposing to repeal the SPC provisions that apply TUPE directly to outsourcings. Questions of whether outsourcings fall within TUPE will be more uncertain and the position will inevitably involve more legal debate, at least in the short term. As part of this consultation, the Government is also proposing to change the wording of the restrictions on varying contracts or dismissing in relation to a TUPE transfer, a move which employers are likely to welcome. This consultation closes on 11 April 2013.
  • Changes to unfair dismissal – the Government is proposing to introduce a cap on the compensatory award for unfair dismissal of one year’s pay. This means that the limit for a successful claim will be the lesser of one year’s pay or the cap (currently £74,200). This is welcome news for employers. However, it may also work to an employer’s disadvantage as employees may try to bring other “uncapped” claims instead, such as whistleblowing or discrimination.
  • Shared parental leave and pay – the Government’s long-awaited proposals around couples sharing maternity leave were set out in the Children and Families Bill. This did not cover how the scheme would work or the eligibility criteria that would apply. Since then, the Government has issued more details about its proposals, including a two-stage eligibility test and how the notice requirements work. The consultation period ends on 17 May 2013 and its response is expected in late Summer.
  • Flexible working for all – the right to request flexible working will be extended to all employees who have 26 weeks or more continuous service. The Government is also looking to remove some of the strict process requirements currently required when making and considering such a request. The Government has asked Acas to put together guidance to assist employers in dealing with this new right and Acas is currently consulting about this. The consultation closes on 20 May 2013. This is expected to come into force in 2014.

Other changes on the agenda include amendments to the whistleblowing legislation and the introduction of an exemption to the unfair dismissal qualifying period in order to protect employees from being dismissed for political opinion or affiliation following last year’s BNP decision by the European Court of Human Rights.

It remains to be seen whether employment law will be simplified through this year’s reform programme. Some of the proposals should make life easier for employers, such as reducing the amount of time required for collective consultation thereby allowing change to be implemented more quickly. However, other proposals appear less straightforward, in particular, “employee shareholder” contracts where there are unanswered questions over how shares would be valued if they are not publicly traded. In addition, there may be unintended consequences in relation to other proposals. The administrative burden of processing fees could slow down an already struggling employment tribunal system and it is anticipated that “protected conversations” could give rise to satellite litigation (for example around whether the “conversation” in question amounted to a settlement offer). It may be the case that, where the Government tries to simplify one area of law, another becomes more complicated.