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Employment law reforms aim to ease burden on businesses

02/12/2011

The Government is planning radical changes to employment law to provide a fairer balance between reducing costs to business at the same time as protecting the rights of employees.

The proposals are in response to public consultations, including the Red Tape Challenge, in which people were invited to suggest regulations that could be scrapped.

The changes include an overhaul of employment tribunals in the hope of saving employers £40m a year, and reviewing whether the 90-day minimum consultation period for collective redundancies is restricting businesses and should be reduced.

In response to the suggestion that dismissal laws are too onerous for small businesses, the Government will launch a call for evidence on two proposals.

Firstly, it will seek views on whether to introduce compensated no fault dismissal for micro firms, with fewer than 10 employees.

Secondly, it will look at ways to slim down existing dismissal processes and how they might be simplified. This could include working with the Advisory, Conciliation and Arbitration Service (ACAS) to make changes to their Code, or providing supplementary guidance for small businesses.

There will also be a call for evidence on the consultation rules for collective redundancies and whether the current 90-day minimum period for more than 100 redundancies can be reduced. 

The Ministry of Justice will shortly publish a consultation on the introduction of fees for anyone wishing to take a claim to an employment tribunal. The proposals will transfer the cost burden from taxpayers to users of the system and encourage claimants to consider seriously the validity of their claim.

The consultation will seek views on two options. The first proposes a system that involves payment of an initial fee to lodge a claim, and another fee to take that claim to hearing.

The second option proposes introducing a £30,000 threshold, so those seeking an award above this level will pay more to bring a claim.

A total of 159 employment regulations were examined in the Red Tape Challenge.

More than 70 of those regulations are now to be merged, simplified or scrapped. The Government says it will:

• publish a call for evidence on proposals to simplify the Transfer of Undertakings (Protection of Employment) - TUPE - rules which many businesses say are too complex and bureaucratic.
• close a whistleblowing case law loophole which allows employees to blow the whistle about their own personal work contract.
• merge 17 National Minimum Wage regulations into one set which will simplify the current regime, making it easier for employers to navigate the law, to complement the work the Low Pay Commission is doing on how best to streamline the system.
• consult in the spring to streamline the current regulatory regime for the recruitment sector.
• create a universally portable CRB check that can be viewed by employers instantly online, from early 2013. These policy changes are being led by the Home Office.

The government insists the proposals are not intended to provide employers with an easy ride. Business Secretary Vince Cable said: “Let me be clear: we are not re-balancing employment law simply in the direction of employers.

“Our proposals strike an appropriate balance and we are keeping the necessary protections already in place to protect employees. Our proposals are not - emphatically not – an attempt to give businesses an easy ride at the expense of their staff. Nor have we made a cynical choice to favour flexibility over fairness.”

 We shall monitor developments closely. In the meantime, please contact our employment law team if you would like more information about the issues raised in this article or any aspect of employment law.