Weekly Employment Update - 19th October 2011

Government plans to reduce regulatory burden on employers

Welcome to Ashfords' Weekly Employment Update, where each week we consider recent developments in Employment and HR issues. This week, we consider the proposals for changes to employment law set out in a recent Government paper.

The Prime Minister hopes that his will be "the first government in modern history to leave office having reduced the overall burden of regulation, rather than increasing it".  The paper "One-in, One-out: Second Statement of New Regulation", published late last month, sets out the Government's progress to date towards achieving this aim and hints at further reforms.  

Reducing the perceived burden of regulation on employers is to be a focus of this strategy.  Of particular importance is the suggestion of increasing the qualifying period for unfair dismissal claims from one to two years, meaning employers could dismiss employees with fewer than 24 months' service without giving a fair reason or following a fair procedure.  The intention to bring about this change, with effect from 6th April 2012, was confirmed in an announcement by George Osborne 3rd October.  

In addition to this, there is a proposal to charge fees for lodging employment tribunal claims from April 2013, which may deter more speculative proceedings.  More details provided by the Chancellor suggest that a claimant will be required to pay fees of £250 when a claim is issued, and a further £1,000 when the hearing is listed, such fees to be refunded only if the claim succeeds.  It is estimated that these changes, along with other reforms to encourage early settlement of disputes and deal with weak and vexatious claims, may reduce unfair dismissal claims by 2,000 per year, saving employers nearly £6 million.

The recent paper also confirms the Government's plan to consult on an amendment to the Equality Act 2010 so that employers are no longer liable for harassment of their employees by third parties where they fail to take reasonable steps to prevent this happening.   

The details of these changes are yet to be finalised.  The results of this month's three-week public consultation on employment law, part of the "Red Tape Challenge" in which anyone can comment online on individual regulations, may yield further proposals for reform.  

While employers will clearly welcome any progress in cutting and simplifying their obligations, there are limits as to the effect of the proposals and as to what can realistically be achieved.  For example, even when the qualifying period for unfair dismissal is lengthened, there remains a risk of the dismissal being found to be discriminatory.  The right to bring a claim for discrimination applies from day one of an individual's employment.

Furthermore, it appears that the proposed fees for tribunal claims are to be means tested.  It remains to be seen which claimants will not have to pay, but where this threshold is set will clearly be important in determining the effectiveness of this change in reducing weaker claims.  

Above all, the "One-in, One-out" campaign to restrict regulation does not apply to legislation arising from EU law.  As the controversy relating to the recent implementation of the Agency Workers Regulations 2010 shows, the Government has little discretion to amend regulations stemming from the EU, even where these give it cause for concern.

Ashfords LLP is Authorised and Regulated by the Solicitors Regulation Authority. The information in this note is intended to be general information about English law only and not comprehensive. It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.