Are you confused by the press reports on the latest proposals for change to employment law?
According to one daily paper last Friday, Vince Cable's latest announcement on the Government's proposals for employment law reform "will be hailed as the biggest reform of employment law for decades". This is a gross exaggeration, but it is fair to say that the proposals in the pipeline will cause significant change as to how disputes are managed or prevented.
Here then is a short summary of what has actually been proposed.
Proposals for a cap on the compensatory award in unfair dismissal claims
The consultation seeks views on an appropriate level of a cap on the compensatory award for unfair dismissal claims (currently £72,300) so as to provide reasonable but not excessive compensation for unfair dismissal.
The proposal is for the Government to have a wide power to set the overall cap at between one and three times median annual earnings (currently £25,882 - £77,646), along with the introduction of a cap of 52 weeks' pay where this is less than the overall cap.
Contrary to some press reports, there is no commitment (yet) to set the cap at one year's median earnings. The cap will not apply to whistleblowing dismissals or discrimination claims.
Settlement agreements
It is proposed that "Compromise Agreements" will be renamed "Settlement Agreements" and that offers of settlement made before a dispute arises cannot be used as evidence in a subsequent unfair dismissal claim in a tribunal. They could potentially still be used in discrimination claims.
The consultation seeks views on:
- a statutory ACAS Code of Practice to guide employers when making offers of settlement
- an optional model Settlement Agreement and Guidance Note
- the wording of template letters which employers can use to make settlement offers to their employees
- a non-binding "guideline tariff" of what a fair and appropriate level of settlement should be
Contrary to some press reports, the Government is not proposing to do away with the current requirement for employees to obtain independent legal advice before a settlement can effectively waive the employee's right to bring a claim before a tribunal. An employee who uses the model Settlement Agreement must still therefore have received independent legal advice before they sign The consultation on compensation caps and settlements closes on 23 November. Click here for the consultation paper.
Also announced on Friday were:
- Consultation on proposed changes to tribunal rules, triggered by a review by Mr Justice Underhill (outgoing President of the Employment Appeal Tribunal) earlier. The consultation includes proposed new tribunal forms. Click here for the consultation paper, draft rules and draft forms.
- The Government's response to the recent TUPE call for evidence, with a promise that the Government will consult on TUPE changes by the end of this year. In particular, the Government is still considering whether the "service provision changes" in TUPE should be retained or repealed
- A resounding NO to the confusing proposal for "compensated no-fault dismissals" for small businesses.
- A promise to work with ACAS to improve guidance for small businesses on the Code of Practice on Disciplinary and Grievance Procedures and to develop an "interactive tool". The Government has also asked ACAS to address how poor performance procedures could be distinguished from misconduct in the ACAS Code
Also in the pipeline:
- A two tier structure for charging of fees in tribunal cases: an initial issue fee when the claim is presented and a further hearing fee prior to hearing (due to come into effect in summer 2013). For further information see the response "Charging fees in the Employment Tribunal and the Employment Appeal Tribunal".
Click here for Vince Cable's announcement on Friday 14 September "New proposals to streamline employment law will boost business".
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.