On 23 November 2011 after a number of what seemed like false starts, the Business Secretary, Vince Cable finally announced a number of long anticipated proposals to reform employment law.
He managed to confuse the message that very same day as at 23.01 GMT the Guardian announced
“Vince Cable to block attempts to relax employment laws”
As it turned out the headline related to an alleged disagreement between Dr Cable and his more radical colleagues with regard to a total relaxation of all employment laws for “micro-businesses”. Dr Cable is said to be firmly opposed to this, as are many Lib-Dems and they have the support of Lord Tebbit, confirmation perhaps that we really do live in interesting times.
However, these are really more than proposals as we expect them to be voted into effect shortly.
The key change is the increase in the qualifying period for unfair dismissal
The Government has confirmed that it plans to increase the qualifying period for claiming unfair dismissal from one year to two years effective 6 April 2012. At the same time it has increased the qualifying period for entitlement to written reasons for dismissal by the same amount.
After a period of uncertainty, eventually on 10 February 2012 the Government published the draft (and memorably named) Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order 2012. The draft Order confirms the new qualifying period will only apply to employees whose employment begins on or after 6 April 2012. Those already in employment before that date will enjoy a one-year qualifying period.
According to the Government, this reform will encourage business to hire more employees and it has won the qualified support of business. Employment lawyers have been more muted in their enthusiasm and other commentators have asserted that there is little or no evidence that moving the threshold has had or will have any effect on job creation. Of about 236,000 claims lodged in the employment tribunals in the 12 months to March 2011, less than 5500 were simple unfair dismissal claims. That would suggest that the risk (as opposed to the fear) of unfair dismissal claims should not be the issue of most concern when considering reform of employment law.
Inevitably the question has arisen as to the possible unintended consequence of forcing employees to find other grounds to found claims in the tribunal and, certainly in the short term the number of sex, race, age or whistleblowing claims are likely to rise as a result. It remains to be seen whether other reforms in the pipeline, such as the introduction of fees will be effective in discouraging these claims.
There are a number of other reforms but mostly to tribunal procedures. These include:
- Deposit orders at the tribunal - currently, if a tribunal considers that all or part of a claim (or a response) has little reasonable prospect of success, it can make an order requiring a party to pay a deposit of £500 or less as a condition of being permitted to continue to take part in the proceedings. From
6 April 2012 this will rise from £500 to £1,000.
- Costs awards - currently, a tribunal can order one party to pay the other party's costs (in limited circumstances) up to a maximum of £10,000. Effective 6 April 2012, the maximum costs a tribunal may order one party to pay will increase to £20,000.
In addition to the above, the Government is consulting about:
The introduction of Tribunal fees
At present no fee is payable in order to bring a claim. It is believed that fees may act a deterrent against the more vexatious claims. The Government’s proposals were published on 14 December 2011 and the consultation closes on 6 March 2012
Penalties for employers who breach employment rights
The Government proposes to impose financial penalties on employers who lose their case at the employment tribunal - a minimum of £100 up to a maximum £5,000. Depressingly, the proposed mechanism is almost identical to paying a fixed penalty charge and so has the inevitable air of a tax on employers.
'Protected conversations' between employers and staff
"So a boss and an employee feel able to sit down together and have a frank conversation at either's request" explained Nick Clegg as we all struggled to imagine how it will work. Can we be frank and earnest with our employees about the issues that really matter? However, not much more has been published since November last year and there is a suspicion that this is not quite as high on the agenda as it was at first thought.
There is an intention to encourage pre-claim conciliation and a new ACAS code is being developed. The requirement will be that all claims will have to be submitted through ACAS and then pre-claim conciliation 'offered'. This form of early intervention is unlikely to become a reality much before Aril 2014 according to ACAS.
We shall keep you up to date with progress
The annual review of Tribunal award limits has taken place and from 1 February 2012,
- The maximum unfair dismissal award increased from £68,400 to £72,300.
- The maximum limit on a week's pay (for the purpose of calculating entitlement to redundancy pay or the basic award) increased from £400 to £430.
Proposed statutory payment rate increases for April 2012
- Statutory maternity, paternity and adoption pay – the weekly rate of pay will increase from £128.73 to £135.45.
- Maternity allowance – the weekly rate will increase from £124.88 to £135.45.
- Statutory sick pay – the weekly rate of pay will increase from £81.60 to £85.85.
The annual up-rating of benefits will take place for state pensions and most other benefits in the first full week of the tax year. In 2012, this will be the week beginning 9 April.
Please don't forget about Pensions auto-enrolment. Starting October 2012 all employers in Great Britain will be required to automatically enrol eligible employees ("jobholders") into an eligible pension scheme. Auto-enrolment will cover most employees above the age of 22, as well as temporary and agency workers (now defined as “jobholders”). For medium sized employers this will mean auto enrolment will have to begin between 1 April 2014 and 1 April 2015. For small employers the deadline will extend to 2017. Once employers become subject to the duties, they will also be required to make minimum pensions contributions for eligible employees.