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Radical Reforms to the UK Employment Law System

In a speech to to EEF, the manufacturers organisation, Business Secretary Vince Cable today announced the results of a consultation on resolving workplace disputes and the Red Tape Challenge review of UK employment law, that amount to the most radical reform to the employment law system for decades.

The Government believes this radical reform to existing employment laws is key in simulating economic growth but that they will strike the right balance between the needs of employers with the rights of individuals thus protecting employee rights.

Will they though? 

The fact of the matter is that many of these changes will require the Government to introduce primary legislation, subject to an already challenging Parliamentary timetable and therefore likely to come into effect in the near future so will they actually have the desired affect?

Would introducing things like NI and/or VAT holidays, or other financial schemes like new staff salaries subsidised by the DWP (Department of work and Pensions) when employing unemployed people not give Employers a more immediate and direct incentive to employee new staff?

So what do you think?  Are the Government pushing things in the right direction or are they heading down a slippery slope that will ultimately have little or no effect whatsoever on economic growth and which could potentially create more uncertainty for Employers and employees alike?

As part of the response to the Resolving Workplace Disputes consultation, the Government has committed to the following:

  • Requiring all employment disputes to go to the Advisory, Conciliation and Arbitration Service (Acas) to be offered pre-claim conciliation before going to a tribunal and from April 2012 increasing the qualification period for unfair dismissal from one to two years.
  • Publishing a consultation in the new year on ‘protected conversations’ which allows employers to discuss issues like retirement or poor performance in an open manner with staff - without this being used in any subsequent tribunal claims.
  • Appointing Mr Justice Underhill to lead an independent review of the existing rules of procedure governing employment tribunals. This review will look to address concerns that they have become increasingly complex and inefficient over time and are no longer fit for purpose.
  • A further consultation on measures to simplify compromise agreements, which will be renamed ‘settlement agreements’. A compromise agreement is a type of employment contract, which means when the working relationship has broken down to an irretrievable status, employees receive a negotiated financial sum to end their contract, and agree to not bring further claims against their employer.
    Announcing plans to consider how and whether to develop a ‘rapid resolution’ scheme which will offer a quicker and cheaper alternative to determination at an employment tribunal. Any proposals would be the subject of a consultation.
  • Modifying the formulae for up-rating employment tribunal awards and statutory redundancy payments to round to the nearest pound. We anticipate that the reduction in redundancy pay and subsequent reduction in associated compensation payments made in employment tribunals will have a direct net saving to business of £5.4. million each year.

Tell us what you think by taking a minute to answer our survey.

A copy of Vince Cable's full speech can be found here.

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