UK: The Changing Face Of UK Employment Law – Keeping Abreast Of The Changes

Last Updated: 14 March 2012
Article by Christopher Middleton and Emma Morrison

One of the major narrative themes that has emerged from the Coalition Government has been the idea that "red tape" is stifling Britain's competitiveness, and its recovery from recession.  To that end, over the past 12 – 18 months we have seen a steady flurry of announcements, proposals and reviews. 

In April 2011, for example, we saw the launch of the Government's "Red Tape Challenge", an opportunity for businesses and members of the public to comment on 21,000 regulations to identify which could be scrapped, simplified or improved.  The regulations were grouped into particular areas, with the spotlight falling on employment law in October 2011.

Following on from this, on 23 November 2011 Vince Cable announced a raft of proposals to reform employment law.  Some of these are concrete changes, which are due to come into force shortly, others are the subject of consultations and calls for evidence.

In addition to these headline-grabbing announcements, there have been plenty of lower-profile or pre-planned changes.  Reading all of the announcements, consultations and proposed amendments would probably take half of 2012, so we have summarised some of the more notable ones below.

Proposed change



Qualifying period for unfair dismissal increases to two years

The increase will apply only to employees who start a new job on or after 6 April 2012.

In theory, this should give employers, more flexibility to dismiss employees during the early stages of their employment, and should reduce the number of unfair dismissal claims. 

In practice, this change is likely to prevent around 2000 claims a year, which only amounts to around 1% of the claims submitted each year.  It is also anticipated that there will be a corresponding increase in discrimination and whistle-blowing claims (as there is no qualifying period of service for these claims). 

Employers should continue to follow appropriate processes before dismissing employees with short service, therefore.

Increase in maximum costs a tribunal can award to £20,000

6 April 2012

The maximum amount that a Tribunal can award in costs is currently £10,000 (although it has always had the power to refer a costs decision to the County Court, which can award an unlimited amount of costs).

In theory, the increase in the Tribunal's powers should act as an additional determent against claimants or respondents with unmeritorious cases.  However, given that costs are awarded in less than 1% of Tribunal claims and the median award is comfortably less than £2,000, it is doubtful how much impact the change will have in practice.

All employers in the UK must automatically enrol eligible jobholders in a pension scheme

The new rules will be phased in over a five year period starting in October 2011.  The date at which the rules apply to a particular employer will depend, essentially, on the number of employees the employer has on its PAYE scheme.

Employers will have to automatically enrol eligible "jobholders" in a pension scheme.  Employers will be able to use an occupational or a personal pension scheme provided it meets certain statutory requirements, or they can enrol eligible jobholders in the National Employment Savings Trust (NEST), the scheme set up by the Government.  A jobholder will be free to opt out of either type of scheme once he has been automatically enrolled, but while he remains an active member his employer will be required to pay a minimum level of pension contributions.

Note that the definition of who is a jobholder is broad, and covers employees and certain other workers.

Guidance from the Supreme Court on justifying retirement

The Supreme Court heard the appeal in Seldon v Clarkson Wright and Jakes in January 2012.  A decision is expected any time between March and June 2012.

The default retirement age of 65 was abolished in April 2011.  Employers who now wish to have a retirement age need to show that this achieves a legitimate aim and that the retirement age is a proportionate way of achieving that aim. 

The Seldon case concerns a law firm with a retirement age of 65.  In defending the claim, the firm offered justifications such as the need for workforce planning and contributing to a congenial/supportive workplace by limiting the expulsion of older workers through performance management. 

The Supreme Court decision should provide guidance on when factors such as these can be relied upon in deciding whether to have a default retirement age.

Introduction of fees for Tribunal claims

Consultation on the issue is due to close in March 2012.  It is envisaged that the fees would be introduced in 2013 - 2014. 

As things stand, an employee who wishes to bring a Tribunal claim does not need to pay a fee.  The Government is consulting on two options.

The first option would require claimants to pay a fee on issue of their claim of around £150 - £250, and a further fee of £250 - £1,250 if the claim proceeds to a hearing.  The second option would require a claimant to pay just an issue fee, ranging from £200 - £1,750.

It is envisaged that the fees would be recoverable by the claimant if their claim is successful, and that they would be exempt from paying the fees if they are in receipt of certain welfare benefits and/or if their income is below a certain level.

If the Government goes ahead with the proposal to introduce a fee structure for Tribunal claims, it seems likely that this will discourage some claimants from bringing claims.  Equally, however, a number of claimants will, by their very nature, be unemployed and therefore in receipt of benefits and/or with a low disposable income. 

Proposed amendment to whistleblowing rules to exclude breaches of the employee's contract. 

The proposal was put forward by Vince Cable in his speech on 23 November 2011.  We are awaiting a date for when this is to be implemented.

As the law stands, an employee can disclose a breach of their own employment contract and then rely on this for the purposes of a whistle-blowing claim.  This is significant, because, unlike for ordinary unfair dismissal claims, there is no qualifying period of service in order for an employee to bring a claim, and there is no limit on the amount of damages that can be awarded. 

Vince Cable stated that the whistle-blowing legislation was not designed to cover breaches of an employee's own contract (and we can see some force in this argument – such breaches are arguably a matter of private, rather than public, interest).  If/when it is made, the change is likely to be welcomed by employers.

Introduction of the right for employers and employees to have "protected conversations"

On 23 November 2011, the Government indicated that it would consult in 2012 about the introduction of protected conversations.  We are awaiting a date for when any reforms will be implemented.

The idea behind "protected conversations" is that an employer and employee will be able to discuss certain matters without either party being able to refer to this in subsequent Tribunal proceedings. 

In principle, this seems like a sensible idea – we often hear of complaints from both employers and employees that each just wants to know where they stand.  As is often the case, however, the devil will be in the detail – it appears that not everything said in a protected conversation will in fact be protected.  For example, it has been suggested by the Government that if an employer says something discriminatory in a protected conversation, the employee would still be able to refer to this in the Tribunal. 

As such, whilst the aim behind protected conversations might be laudable, it does not take a great deal of imagination to foresee a lot of ancillary litigation occurring in relation to exactly what was said in a protected conversation and whether this should be admissible as evidence in Tribunal proceedings.  It is also worth noting that employers and employees already have, in principle, the ability to hold 'without prejudice' conversations, the details of which are not admissible in legal proceedings.

Review of TUPE laws

The Government published a call for evidence in relation to the TUPE laws on 23 November 2011.  The call for evidence closed on 31 January 2012.  We are awaiting a date for when any reforms will be implemented.

The TUPE rules provide protections to employees on the transfer of a business and in outsourcing situations.  The Government has suggested that the existing rules are overly bureaucratic and 'gold-plate' the European legislation on which they are based (the Acquired Rights Directive).

It remains to be seen what concrete proposals the Government will come up with to reform TUPE, but its remove for manoeuvre is relatively limited precisely because TUPE is derived from a European directive.  One area where TUPE does go beyond the directive is in its very wide application to almost all outsourcing situations.  However, these provisions were introduced to remove the previous ambiguity in this area which was felt to be causing problems for businesses.  It is not clear, therefore, whether reverting to the previous rules would in fact be helpful to businesses.

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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