UK: Employment Law Reform - At Long Last Some Detail

Last Updated: 28 December 2011
Article by Ben Smith

After many months of speculation, leaks and snippets of information, the Government's formal response to the consultation on Resolving Workplace Disputes has finally been published. As well as the already disclosed increase to 2 years for the qualifying period for unfair dismissal, the proposed reforms place an increased emphasis on workplace mediation and early conciliation. There are other changes, some subject to further consultation, which will bring about significant reform to employment issues in the workplace.

We now take a look at some of the most interesting:

Compromise agreements

The Government wants to encourage the use of simplified "settlement agreements" (to replace compromise agreements) and make it easy to reach a no fault settlement. A further consultation will look at developing standard form wording and guidance, amending legislation so that all existing and future claims can be covered together with the ability to use them at an early stage without the risk of constructive dismissal claims.

The Government will also be consulting on the introduction of a system of "protected conversations" to allow employers or employees to initiate a conversation about an employment issue at any time "as a way of resolving the matter without fear". The stated intention is to allow employers to talk to employees about poor performance or retirement plans. However, what seems like a simple idea is fraught with practical difficulties, and could well lead to disputes around whether there was or was not a protected conversation. It is understood that an employer would not be protected from claims of discrimination or harassment in relation to these conversations which also raises the question as to how it could approach discussions about retirement which would be inherently age discriminatory, without putting itself at risk. We await further details of this with interest!


The Government will introduce an early conciliation period. As the first part of the tribunal process, Claimants will have to submit details of their claim to ACAS and will be offered the option of a one month conciliation period. This will not be compulsory and will have a knock on effect on limitation periods, but how this will be dealt with has not yet been decided. A fixed, early conciliation period was introduced by the previous Government but was severely undermined by a lack of resources with ACAS, which is an issue that needs to be addressed by this Government if any such plans are to succeed. The tribunal procedural rules will be the subject of a fundamental review by the outgoing President of the EAT in order to maximise their effectiveness which includes considering expanding strike-out powers. However, from April 2012, deposit orders will increase from £500 to £1,000 and the maximum amount of costs that can be awarded will increase from £10,000 to £20,000. Despite little support for the idea, unfair dismissal claims will be heard in the future by an employment judge alone. There are also proposals to consider

Extending qualifying period

As already mentioned, the qualifying period for unfair dismissal claims will increase to two years from April 2012. The Government does not think this will cause a considerable disparity of impact on any particular group but should this be challenged it believes it would be able to justify this as a proportionate means of achieving the legitimate aim of improving business confidence to recruit and retain staff. However, many commentators consider that this change will have a disparate impact on young people, particularly in view of the high levels of youth unemployment. The qualifying period of service was previously reduced to 12 months due to a successful challenge to a 2 year period based on sex discrimination, so it is unlikely that this will be introduced without litigation following.

Financial penalties

The Government has decided not to impose an automatic penalty for breaches of employment law by employers. Instead, tribunal judges will be given a discretion to consider imposing a penalty where the employer's behaviour in committing the breach has aggravating features. This will be half of the award made by the tribunal with a maximum penalty of £5000 which will be reduced by 50% if this is paid within 21 days.

Still to come...

In addition, the Government will be consulting next year on the proposed introduction of fees in order to bring and continue with tribunal claims. It has also asked for evidence on the effectiveness of TUPE with a consideration of "gold-plated" provisions, such as the service provision changes, with some fairly open questions being put. Similarly, it has asked for evidence on collective redundancies including reducing the consultation period for redundancies involving over 100 employees from 90 days to 60, 45 or 30 days.

Vince Cable also referred in his speech to plans to amend the whistle-blowing legislation so that a claim cannot be based on an alleged breach of the employee's contract of employment. Such claims are currently used as part of what are in essence purely internal disputes regarding that employee's employment situation, and do not involve any disclosures of a breach of any wider law or regulations. There are also proposals to introduce no-fault compensated dismissals for micro-employers i.e. those with ten or fewer employees. In addition, the Government will be looking at "radically slimming down.. existing dismissal processes" by seeking views on how to move to a simpler, quicker and clearer dismissal process including potentially working with ACAS to make changes to their Code. It certainly looks as if 2012 and beyond are going to be interesting times for those involved in employment law issues!

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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