The People Bulletin

The government has announced plans to review three areas of employment law in an effort to counter accusations that it is not doing enough to reduce regulation.[1]  The proposals will include: 

• introducing a cap on the levels of compensation awarded by the employment tribunals in cases of discrimination;
• reducing the period of time employers are required to consult on collective redundancy plans; and
• simplifying TUPE rules, checking whether they are ‘gold plated’ or ‘too bureaucratic’.[2] 

The public sector union Unison has warned that the plans could weaken employment rights, making it easier for bosses to fire workers and harder for staff to challenge unfair treatment. General secretary Dave Prentis said: “The Tory review of employment law will hit ordinary working people hard. The government is weighting the jobs market heavily in favour of bosses, who will be able to hire and fire their staff at will.”

Employment Relations Minister Edward Davey (a Liberal Demcrat) detailed the plans during a speech at the Institute of Economic Affairs on 11 May 2011 and said “The areas we are reviewing are priorities for employers. We want to make it easier for businesses to take on staff and grow. ..We will be looking carefully at the arguments for reform. Fairness for individuals will not be compromised – but where we can make legislation easier to understand, improve efficiency and reduce unnecessary bureaucracy we will.”

The government has also announced that it will shortly begin consulting on plans to extend the right to request flexible working to all employees and introduce a new system of shared parental leave from 2015 – to make it easier for parents to work whilst bringing up a family.

A muddled approach?

Selwyn Blyth, partner at Pinsent Masons commented: 

“This looks like a move to appease the business community – in fact, the median award for discrimination cases is £5,000 to £10,000 – it is the big awards that catch the headlines and distort the public’s impression of what tribunals award in these cases.  There may be issues about the legality of reforming compensation in discrimination cases – as a country we are expected to give an adequate remedy for discrimination under EU law – possible reforms (e.g. imposing a cap on compensation where there has previously been none) may be regressive and vulnerable to challenge in the ECJ. 

“The government’s proposals seem muddled: its other proposed reforms (e.g. increasing the service requirement for unfair dismissal claims from one year to two years) may unwittingly result in more discrimination claims – if people feel aggrieved about dismissal but do not have the service to claim unfair dismissal, they may bring a discrimination claim which does not require any service.  The government says it is responding to concerns about speculative claims, but is the right way to do this to penalise people with genuine claims in terms of the compensation they can recover? Whatever the compensation reforms, there will still remain a financial  incentive to bring a claim – if claims are really speculative, it would be better to focus on weeding out those claims at an early stage of the tribunal process.”  

[1] See ‘Employment tribunal system “broken”, says CBI – but it doesn’t need to be’ in The People Bulletin, 12 January 2011.

[2] See Deborah Nathan’s ‘The red-circled rights’ in The People Bulletin, 10 February 2010.