Reform is coming - are you ready?

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Overview

Reform is becoming something of a buzzword in the current climate, from the NHS to public sector pensions, and employment law is no different. There are a number of changes on the horizon that will have a significant impact on businesses of all shapes and sizes, and keeping up to date is essential. The first major change could be a revised approach to resolving workplace disputes. This follows a review by the Department for Business Innovation & Skills (BIS) into how businesses and employees access employment tribunals, and is designed to achieve early resolution of workplace disputes, ensure the process is as effective as possible and make businesses feel more confident in employing people.

The majority of the proposed reforms should be of real benefit to businesses. Formalising the process of settlement puts the onus back on the claimant to seek legal advice, discouraging vexatious litigation. The introduction of fee-charging mechanisms, meanwhile, means claimants must pay a minimum fee based on their claim, which is likely to reduce the number of people testing the water to see what they might get. Smaller businesses will also benefit hugely from increases to deposit orders, which allow applications for costs to be made when the deposit is not beaten at tribunal. The thresholds would rise from between £500 and £10,000 to between £1,000 and £20,000, better reflecting the actual legal costs involved in defending proceedings.

The most important change, however, could be the increase in the qualification period after which employees can claim for unfair dismissal, which seems likely to rise from 1 to 2 years. This is likely to reduce the number of such claims by around 4,500, and will give businesses more breathing space should a new employee not live up to expectations.

Edward Davey MP has also announced plans to make it easier for businesses to take on staff and grow. His recommendations will see key reforms regarding compensation levels for discrimination, collective redundancy rules and simplifying TUPE.

At the moment, we suffer from a lack of clarity in the levels of compensation that can be awarded for discrimination claims; there is no cap and not much in the way of guidance. If Davey is suggesting a graded structure, as seems likely, it will certainly help employers when it comes to negotiating settlements and in reaching a reasonable understanding.

Davey is also considering shortening the collective redundancy period. This should help employers and employees alike, neither of whom necessarily benefit from 90 days to consider the options. After all, it is a very long time for an individual to be kept uncertain as to whether they will be able to stay with a company or not.

The proposed changes to TUPE, however, may well grab headlines but may be severely limited by the EU employment directives that TUPE legislation implements. Failure to comply with EU directives leads to challenges in the European Court. Of course, any changes that make processes simpler for employers must be welcomed. Whether or not TUPE is actually an impediment to employing people or to business growth remains to be seen. TUPE is not more complicated than any other element of employment law, and there are likely to be other, more pressing issues that could be addressed as a priority.