Mr Cable has a cunning plan to streamline employment law.

On 14th September, the Government gave further details of the proposals around employment law reform as follows:

  • A consultation about ‘settlement agreements’ which will ‘help end employment relationships in a fair and consensual way’.  ACAS has been asked to come up with a new code of practice on this
  • A response to the consultation on ‘no fault dismissals’
  • A consultation on reducing the cap for compensation in claims of unfair dismissal
  • A consultation to make simplify employment tribunal rules where judges can dismiss weak cases more easily
  • A commitment to respond to the consultation on TUPE changes

The proposals on settlement agreements seems like a mixed bag.  In the consultation on ‘no fault dismissals’ the existing use of compromise agreements was preferred by most respondents.  I like the idea that there are template agreements available for use (they wouldn’t be compulsory) but it is a shame the proposals exclude a provision which would not require independent advice (lawyer, union etc).  Clarity over when a without prejudice discussion could occur will also be welcome although there is a proposal that ‘offers of settlement are not admissible as evidence in unfair dismissal cases’.

The consultation on no fault dismissals has led the Government to abandon the idea which is, in my opinion, good news.  Too much confusion for too little benefit.

The revised cap on unfair dismissal compensation is being proposed either as a cap of 12 months’ pay; or as the lower of national median earnings (c.£26,000) or the annual net salary.  Their consultation rightly points out that the median average unfair dismissal award is less than £5,000 and questions whether a large cap (currently at £72,300) can give rise to unrealistic perceptions among claimants.  However, where a claimant has a salary / income in excess of any proposed cap the risk is that the will add in uncapped claims (eg discrimination) in order to increase their financial settlement.  Despite this, on the whole I would support the proposal.

Reading the note from Justice Underhill (June 2012) about tribunal procedure which led to the part of the announcement regarding tribunals, he advocated that stronger case management was what was required in the system.  The power to strike out weak cases is already available to tribunals.  He has however suggested an ‘initial sift stage’ where an Employment Judge reviews the case and can strike out any case which has no ‘reasonable prospect of success’.  Interestingly, when you read the actual detail of his paper it appears very low key.  Is the announcement therefore a case of ‘great headline, weak story’?  The consultation is now open.

The TUPE review is fairly detailed but the Government’s intention is to amend TUPE in its current form in some areas and to clarify the guidance in others.

 

Finally – on the BIS website detailing the proposed changes there was a reference at the bottom of the page regarding Employment Tribunal fees which at the time I write this has no link to any proposals.  When I enquire, BIS directed me to the Ministry of Justice website which set out the details of the consultation together with their response and proposals for implementation in summer 2013.

Not surprisingly, claimant groups & trade unions broadly disagreed with the proposals while business organisations supported them.  There was consensus on the proposals of a two stage fee ie one on application and a higher one on hearing as a way to encourage resolution.  The outcome was fees split between two levels.  Level 1 claims (unpaid wages, payment in lieu of notice etc) was £160 to issue the claim and £230 for the hearing stage.  Level two (unfair dismissal, discrimination, equal pay etc) was £250 & £950 respectively.  There is also detail on the ‘remission system’ ie who doesn’t have to pay.  No fees are payable where a claimant is in receipt of certain state benefits (eg Income Support) or their income is below a certain level.  There is also the chance for reduced fees where the income level is within a particular range.

I have mixed views on these proposals.  Everyone will have examples of vexatious claims by feckless employees as well as egregious behaviour by rogue employers neither of which will be wholly satisfied by these suggestions.  The remission system seems complex and I worry that the administration of this would put off the genuine low paid person seeking to recover their last week’s unpaid salary of £250 let alone the thought of having to pay a fee of £390.  Similarly, a vexatious six figure claim of discrimination from an employee whose annual income was also six figure is unlikely to be dissuaded by having to write a £1,200 cheque.  However these extreme examples are not what the proposals are aiming at but trying to reduce some of the 186,300 claims made (year to March 2012 were released today).  When the fees are finally implemented in under a year we will see the outcome pretty quickly.

 

You can see detail on these proposals at the following links:

Department for Business, Innovation & Skills (BIS) press release.

BIS details on no fault dismissals.

BIS consultation on settlement agreements and cap on unfair dismissal awards.

BIS consultation on Employment Tribunal rules.

Letter to BIS Minister from Mr Justice Underhill.

Government response to TUPE consultations.

Ministry of Justice consultation and proposals regarding Employment Tribunal fees.