Employment law changes ‘to ease burden on businesses’

The Government has announced a series of employment law changes designed to reduce the burden on businesses while retaining reasonable protection for employees.

Ministers are planning to reduce the compensation cap for unfair dismissal claims, reduce the number of vexatious claims and promote the use of settlement agreements. However, they have decided against introducing compensated no fault dismissal.

The proposals, which are subject to public consultation, include:

• Promoting the use of settlement agreements. The Government’s consultation document sets out how the process will work in practice. It provides a template letter and guidance on how employers and employees would reach agreement. Acas has also agreed to provide a new code of practice for settlement agreements.
• Reducing the compensation cap, currently at £72,300. The two proposals are a cap of up to 12 months pay, and a new, reduced, upper limit.
• Further streamlining of employment tribunals, following on from Justice Underhill’s review. The consultation includes proposals on how judges could dismiss weak cases more easily and reduce the number of preliminary hearings.

The Government also says that it will provide:

• A summary of responses to the call for evidence on changes to TUPE with a commitment to consult on issues, raised by business, by the end of the year;
• A formal response to the call for evidence on proposals for compensated no fault dismissal for micro-firms and the Acas code on discipline and grievance. Based on the evidence presented by business the Government will not be taking forward the proposal on no fault dismissal, but will work with Acas to make the guidance to their code more accessible, especially for small businesses.

Business Secretary Vince Cable says the steps will benefit small businesses. He said: “”We have been looking across the range of employment laws with a view to making it easier for firms to hire staff while protecting basic labour rights.

“We acknowledge that more can be done to help small companies by reducing the burden of employment tribunals, which we are reforming, and moving to less confrontational dispute resolutions through settlement agreements.””

We shall keep clients informed of developments.

Please contact Robert Bedford if you would like more information about the issues raised in this article or any aspect of employment law.