Vince Cable has announced various consultations on employment law. These proposed changes to employment law are part of the Government’s systematic review of employment law to reduce employment red tape and give firms more flexibility and confidence in managing their workforce. BIS reports that these proposed reforms are most likely to benefit small businesses.
In relation to ending the employment relationship, the first consultation will deal with reducing the cap on the unfair dismissal compensatory award from £72,300 to an amount between one and three times median annual earings (currently £25,882 - £77,646) or a years pay. This does not make it easier to dismiss someone but makes it cheaper if an employer gets it wrong. It does not address the issue of a vexatious or unreasonable employer nor does it deal with the issue of an employee bringing a hopeless case. These issues arguably need to be dealt with by more rigorous enforcement of costs rules. Employees will still try and bring discrimination claims anyway, which are uncapped.
The Government aim is also to encourage the use of settlement agreements as a means of coming to a consensual agreement, allowing both parties to avoid the costs and stresses of a tribunal case. A standard template ‘settlement agreement’ is to be published and there is a move to abolish the need for an employee to get independent advice from CAB, union or lawyer before settling a claim. This has some benefits but there stills needs to be safeguards to ensure that employees are not pressured into signing something which may not reflect a reasonable offer or include all contractual entitlements.
Other proposals relate to the streamlining of employment tribunals and TUPE processes as well as recommendations on how to improve guidance for small businesses. The Government has confirmed that it will not be taking forward proposals on compensated no fault dismissals.
Sarah Veale from the TUC told the BBC that the forthcoming proposals were still wrong.
"The clue is in the term `unfair dismissal`," she said.
"If people have been unfairly dismissed, this means the employer has done something wrong and it`s right that the tribunal should then decide what sort of compensation the person deserves," she said.
But John Walker, of the Federation of Small Businesses, welcomed the altered proposals.
"Too many small firms don`t take on staff because they fear being taken to an employment tribunal," he said.
"Other firms fear facing an expensive and lengthy dismissal process," he added.