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Gov't Review of Employment Law Announced

In a significant first step in taking forward the Government's comprehensive review of UK employment law, and close on the heels of the Government appointing Lord Young to provide a report on how to make Government more small business and start-up friendly, the coalition today announced that the Department for Business, Skills & Innovation (BIS) and the Ministry of Justice’s Tribunals Service are conducting a public consultation on resolving workplace disputes -

The Government's plans are ultimately intended to make it easier for businesses to expand and take on new staff, especially small businesses, by reducing regulation, not least the red tape surrounding the current employment tribunals system and believe that a radical reform on how workplace disputes are resolved is key in alleviating much of the pressures they believe are holding businesses back from expanding and/or taking on new staff.

With the average cost of defending a claim in excess of £4000, and the number of claims steadily rising year on year (Tribunal claims rose to 236,000 last year – a rise of 56 per cent on 2009), businesses have for a long time expressed their concerns that the system is too costly, not just in terms of money but also in precious management time and lost productivity.

Prime Minister David Cameron said “Today's announcements on reforms to employment law are among the first conclusions of our government-wide growth review, and highlight our determination to ensure that employment law is no longer seen as a barrier to growth, while making sure that employees and employers are treated fairly.

Giving businesses the confidence to take on somebody new will be a real boost to the economy, and help generate the sustainable growth we need."

The key proposals set out in the consultation published today are:

  • Giving businesses greater confidence to hire new staff by increasing the qualifying period for employees to be able to bring a claim for unfair dismissal from one to two years - this will also ultimately reduce the number of disputes that go to Employment Tribunals
  • Encouraging parties to resolve disputes between themselves as early as possible – requiring all claims to be lodged with Acas (Advisory, Conciliation and Arbitration Service) in the first instance to allow pre-claim conciliation to be offered. This also includes introducing settlement offers to encourage parties to make reasonable offers of settlement to avoid Tribunal hearings and encouraging parties to consider other forms of early dispute resolution such as mediation.
  • Speeding up the tribunal process – extending the jurisdictions where judges would sit alone to include unfair dismissal, introducing the use of legal officers to deal with certain case management functions and taking witness statements as read. This will result in Employment Tribunal resources being used more efficiently and allow cases to be listed and heard more quickly, saving time and cost.
  • Tackling weak and vexatious claims – providing the Employment Tribunals with a range of more flexible case management powers so that weaker cases can be dealt with in a way that does not mean disproportionate costs for employers. 
  • Increase the provision of information – aimed at reducing speculative claims, this would require more information on the nature of the claim being made and to include a statement of loss. It will help parties to decide whether to agree a settlement offer or proceed to a Tribunal hearing.
  • Withdraw the payment of expenses - encouraging parties to either settle earlier or reduce the number of witnesses they call.
  • Introduce financial penalties for employers found to have breached rights – aimed at encouraging greater compliance from employers and thus a reduction in the number of Tribunal cases.

Combine today's announcements with the recent reform proposals set out by Lord Justice Jackson, not least the abolition of recovery of Success Fees and ATE insurance premiums from unsuccessful opponents ("recoverability"), essentially the end of 'no win, no fee' claims, many will be wondering what all of this reform will mean to the access to justice of litigants in the future.

So if you thought employment laws were difficult to keep up with before, brace looks like there are plenty more changes in the pipeline which will in themselves put more pressure on Employers to ensure they are compliant, especially faced with the prospect of financial penalties for non-compliance.

Tell us what you think.  Is the Government going in the right direction with their proposals, or have they gone too far?

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