The Government recently made a number of significant announcements with regard to planned reforms to employment law.

Unfair dismissal limits

The Government has announced its intention to cap the compensatory award in unfair dismissal claims at 12 months' of the claimant's salary. Once implemented this will run alongside the new limit referred to above of £74,200. As such, when this change takes effect the maximum compensatory award that an ex-employee will be able to receive will be 12 months' pay (i.e. based on the actual pay that the employee received prior to their dismissal) or £74,200, whichever is the lower.  

Settlement Agreements

As part of the "Ending the Employment Relationship" consultation the Government has announced that it plans to bring forward some of its reforms relating to settlement agreements (previously known as compromise agreements). In order to make the operation of settlement agreements more straightforward, and to encourage their use, the Government proposes to make any pre-termination negotiations in respect of settlement agreements inadmissible in Employment Tribunal proceedings, except where there has been "improper behaviour" on the part of one of the parties. This is to allow pre-termination negotiations to take place on a without prejudice basis.

New guidance will also be produced by ACAS, which will include model letters and a model agreement.

The Government have though confirmed that they will not proceed with the proposal to issue a guideline tariff (i.e. an indication of what employers should pay employees under the settlement agreement) as contained in the original consultation document.

These changes are expected to come into force in the summer of this year.

TUPE Changes

The Government has also announced a further consultation into the reform of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).

The intention of this consultation is to remove any "gold-plating" where the TUPE Regulations go beyond what is required by the European Directive. The consultation document includes proposals to:-

  • remove service-provision changes from the scope of the Regulations
  • removing the requirement on the transferor to provide the transferee with employee liability information within 14 days of the transfer
  • widen the ability to make changes to the terms and conditions of employee's contracts after transfer
  • amend certain aspects relating to the dismissal of employees
  • allow micro-businesses to inform and consult with employees directly rather than through representatives.

Early Conciliation

The Government has announced that it intends to introduce a new Early Conciliation process for all Employment Tribunal claims. Under this proposal any prospective Claimant will be required to lodge an early conciliation form with ACAS before the matter can be raised with the Tribunal. ACAS will then be obliged to conciliate on the matter, and hopefully resolve it, before an Employment Tribunal claim is raised.