UK: Employment Law Reforms Announced

Last Updated: 30 November 2011
Article by Sarah Ozanne, Anthony Fincham and Alison Woods

Business Secretary Vince Cable has announced the government's proposals for what BIS describes as the most radical reform to the employment law system for decades. The suite of measures is extensive and is part of the Government's plans "to safeguard workers' rights while deregulating to reduce the onerous and unnecessary demands on business". Dr Cable stressed that the measures are not an attempt to give "businesses an easy ride at the expense of their staff. This is not about introducing a "hire and fire" culture. We are not making a cynical choice to favour flexibility over fairness. Instead we are hacking through the excessive red tape and regulation that prevents many businesses from creating jobs in the first place".

The key proposals are:-

  • Doubling the qualifying period for the right to claim unfair dismissal from one year to two years.
  • Simplifying compromise agreements, including amending the requirement to include long lists of causes of actions, clarifying their use in discrimination claims and renaming them "settlement agreements".
  • Radically reforming the Tribunal system. Mr. Justice Underhill, outgoing president of the EAT, has been asked to lead a fundamental review of the rules of procedure for employment tribunals. A streamlined procedural code is expected by the end of April 2012. This will include changes to cost and deposit orders, witness statements, witness expenses and employment judges sitting alone in unfair dismissal cases.  A consultation will also be published on introducing fees for anyone wishing to take a claim to an employment tribunal. Two options are proposed. The first proposes a system that involves payment of a fee to lodge a claim and a further fee to take that claim to a hearing. The second option proposes introducing a £30,000 threshold so those seeking an award of more than £30,000 pay more.
  • Examining the case for a "rapid resolution scheme" for those with more straightforward claims which could deliver a determination without the need for a hearing.
  • Requiring all claimants to submit their complaint to Acas in order that the parties are given an opportunity to resolve their dispute through conciliation before it can be taken to a tribunal.
  • Introducing a system of "protected conversations". These will allow employers to raise issues such as poor performance in an open way, without fear that such a discussion will be used against them if discussions break down. Consultation on this will be published in the New Year.
  • Giving employment judges discretionary powers to impose financial penalties on employers where the employer's behaviour in committing a breach of an employment right has aggravating features. The penalty would be payable to the Exchequer.
  • Amending the whistleblowing legislation so that a "loophole" is closed and employees are no longer able to rely on it in relation to breaches of their own employment contracts.
  • A review of evidence and representations on the rules governing statutory consultations on collective redundancies, exploring the consequences of reducing the current 90 day limit to 60, 45 or possibly even 30 days.
  • A review of evidence and representations on the current TUPE regulations, seeking views on how the regulations may be simplified.
  • A review of evidence and representations on introducing compensated no-fault dismissal for micro firms (those with 10 or fewer employees).
  • Radically slimming down the existing dismissal processes including potentially making amendments to the Acas Code and introducing supplementary guidance for small businesses.
  • Changing attitudes towards mediation and making it an accepted part of the dispute resolution process.
  • Reviewing the Agency Workers Regulations and any associated paperwork about the implementation of the Agency Workers Directive (in 18 months time) with a focus on looking for opportunities to simplify it.
  • Consultation on scrapping unnecessary rules and amending remaining rules on hiring businesses to make the use of agency workers more flexible.
  • Introducing greater flexibility in relation to parental leave.
  • Making CRB results available online from 2013 so an employer can see whether new information has been added since the check was undertaken.

In addition to these specific points the Government is also undertaking to simplify other rules and regulations relating to employment law and as a result of the 159 regulations looked at, over 40% are to be merged, simplified or scrapped.

To read Vince Cable's speech in full please click here

To access the Government response to the consultation on Resolving Workplace Disputes please click here
To access the call for evidence on the effectiveness of TUPE please click here. The closing date is 31st January 2012.

To access the call for evidence on collective redundancy consultation rules please click here. The closing date is 31st January 2012.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 24/11/2011.

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