A difficult judgment – the Government’s reforms to employment law

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Posted in:HR and Employment|September 18, 2012 | Join the mailing list

On 14th September 2012, the Government’s Business Secretary, Vince Cable, announced further proposed changes to UK employment laws. In a move which has not surprisingly led to criticism from trade union leaders, Mr Cable announced that the Government would
be launching a formal consultation on its proposal to reduce the maximum unfair dismissal award from the current ceiling of £72,300 down to one year’s pay for the person bringing the claim.

This move follows on from the extension in April 2012 of the period of employment that you need to be able to bring an unfair dismissal claim from one year to two years and is also linked to the planned introduction of Employment Tribunal fees in 2013. The
intention is to require claimants from next year to have to pay a fixed fee to the Employment Tribunal before they are able to issue an Employment Tribunal claim.

These reforms have not gone down well with unions and with other employee bodies, but have been welcomed by many employer organisations, such as the Federation of Small Businesses.  They also have an air of inevitability, says Nigel Crebbin, who is a partner
in the employment team at Berg.

"For many years, employers have been complaining that employment legislation is harmful to business and that the Employment Tribunal system is geared too much in favour of the employee," says Nigel. "Whether that’s true or not, its undeniable that the current
economic climate is putting pressure on the Government to take action to help businesses survive and develop, as well as pressure to reduce public spending, and in these circumstances the changes being made come as no surprise."

"The changes allow the Government to say that they are doing what they can to help businesses survive and grow, and also by taking actions which may well lead to a reduction in the number of Employment Tribunal claims, the Government is making moves which
are likely to cut the cost to the state of the Employment Tribunal system."

"The reduction in the level of unfair dismissal compensation, coupled with the introduction of fees for issuing Employment Tribunal claims, is likely to make former employees think carefully before embarking on unfair dismissal claims, and with the Employment
Tribunal system being stretched at present with regard to its workload and financial resources, a reduction in the number of claims will be welcome news to the Government." 

A further planned change which is in keeping with all of this is the intention to require claimants to submit their claim first to ACAS, before being able to push ahead in the Employment Tribunal. The idea is that ACAS will try to resolve the matter by means
of an agreed settlement between the parties and if such a settlement is reached, then Employment Tribunal litigation will be avoided. One issue with regard to this however, is whether the state will provide sufficient resources to ACAS to enable them properly
to fulfil this expanded role. "With cost cutting being such a high concern for the Government, this greater involvement of ACAS does pose a problem," says Nigel. "The change is only likely to be effective if ACAS has sufficient resources available to it, but
the problem there is that what we save on the reduction in claims making it to Employment Tribunal, we may have to spend on providing the resources needed to bring about this reduction."  

To discuss how we can provide further advice in connection with these issues, please contact Alison Loveday, Managing Partner and Head of Employment Team, by email to alisonl@berg.co.uk
or alternatively you can call Alison on 0161 833 9211.

The information and opinions contained in this article are not intended to be comprehensive or to provide legal advice.  No responsibility for this article’s accuracy or correctness is assumed by Berg or any of its partners or
employees.  Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of the contents of this article.

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