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Vince Cable announces employment law reform developments

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Employment law reform: On 14th September, Business Secretary Vince Cable made a number of important announcements regarding the government’s employment law reform programme.

The purpose of these employment law reforms is to speed up economic recovery by boosting employer confidence in recruiting staff. As a result, the reforms aim to minimise the risks to employers and speed up the process when they end employment relationships with staff.

In essence, the announcements cover five key areas of the Enterprise and Regulatory Reform Bill 2012-2013 (ERRB) which is currently before Parliament.

These are:

1.    A cap on the compensatory award in unfair dismissal claims
A consultation paper called Ending the employment relationship is seeking views by 23rdNovember 2012 on:

  • What should be the limit for the compensatory award in unfair dismissal claims; and
  • How this should be calculated.

The ERRB would empower the Secretary of State to vary this limit. It could be set at:

  • Between one and three times median annual earnings,
  • a number of weeks’ pay not less than 52 weeks; or
  • the lower of these two figures.

2.    The greater use of compromise agreements when terminating employment
The government wants to encourage the use of compromise agreements to enable employment relationships to be ended on agreed terms. Under the ERRB, these types of agreements will be named “settlement agreements”.

Employers would also be able to have conversations about a proposed termination that could not be used as evidence in future unfair dismissal claims.

To this end, the government’s Ending the employment relationship consultation paper is seeking views by 23rd November 2012 on proposals to simplify the use of settlement agreements. Proposals include:

  • A statutory Acas code of practice on settlement agreements; and
  • A “guideline tariff” to help the parties set the severance payment

3.    Revisions to the Employment Tribunal Rules of Procedure
A consultation paper, Employment Tribunal Rules: Review by Mr Justice Underhill, is seeking views by 23rd November 2012 on a number of issues around proposed draft Employment Tribunal Rules.

These include:

  • whether there are disadvantages to removing the £20,000 cap on the assessment of costs awards by a tribunal; and;
  • how the problem of non-payment of tribunal awards could be addressed.

4.    Changes to the regulations relating to transfer of business employees (TUPE)
The government has responded to the findings of a consultation on the Effectiveness of Transfer of Undertakings (Protection of Employment) Regulations 2006 and will now be designing policy which will consider a number of suggested ideas:

These include:

  • Whether the provisions related to changing service providers should be retained or repealed;
  • Whether both the transferee and transferor should share liability for transferred employees;
  • Whether the transferee should have access to employee liability information earlier in the process; and
  • Whether TUPE could be amended so a change in the location of the workplace can constitute an economic, technical and organisational reason entailing changes to the workforce.

5.    Improvement to the Code of Practice on Disciplinary & Grievance procedures
Further to its consultation on “compensated no fault dismissal” for micro-firms, the government has decided that it will not take this proposal forward.

However, it is concerned that there needs to be more clarity and assistance for small businesses using the Code of Practice on Disciplinary and Grievance procedures. To this end, it has asked Acas to improve the code and develop and “interactive tool”. Acas will also consider how procedures for misconduct can be better distinguished from procedures for poor performance.

Need more advice?

If you are considering dismissing an employee or taking on employees in an existing business, you can call Flint Bishop’s Head of Employment Law, Robert Tice, for a  free confidential chat on 01332 226149. The employment law team can also help you put together any policies, procedures and training to ensure your staff are aware of their responsibilities.

If you would like access to future law updates as well as over 60 other business critical documents for only £99 a year, then you may be interested in finding out more about our online HR and employment law service, FB Support.

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