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Employment law shake-up announced

Meredith Hurst Friday, January 28, 2011

David Cameron and Vince Cable the business secretary announced fundamental reforms to employment law and the employment tribunal system yesterday.

The avowed intention behind the proposed changes is to lift the burden of red tape on businesses as the private sector is asked to reverse the economic decline.  It is also the government's intention to reduce regulation, provide the right environment to enable companies to grow and to kick-start job growth.

Among the changes proposed, the government is considering the introduction of fee of up to £500 to lodge an employment tribunal claim. Currently, there is no fee payable to the employment tribunal on issuing a claim as there is when pursuing a claim in the county court.  It is thought that an employment tribunal fee would help to weed out vexatious and spurious claims.

Another proposal is for parties in employment disputes to be required to engage in compulsory mediation before a case can proceed to the tribunal, although it is not yet clear how this scheme would operate.  Employment tribunals currently have the power to offer non-compulsory judicial mediation but this can only work where the parties' positions are not entrenched.

The most fundamental change is the  proposal to increase the qualifying period of service in unfair dismissal claims from one year to two years.  This move would turn back the clock and cast the law as it was in 1999.

These changes are broadly welcomed as reasonable by businesses but unions have reacted less favourably.  TUC secretary general Brendan Barber, is quoted in the Daily Mail as saying "while employer groups complain that tribunals are costing them too much, they have lost sight of the fact that if firm's treated their staff fairly, few would ever find themselves taken to court."

As always, views appear to be polarised.  From a professional point of view, employment lawyers would like to think that they provide employee clients with sound advice as to the realistic merits of their claims and to that extent, would never advise a client to pursue an unmeritorious claim.  Indeed, there may be potential cost penalties imposed on both the client and the solicitor if this were the case.

There is also something to be said for behaving reasonably as an employer and engaging in open dialogue with staff.  Furthermore, it is always sensible on the part of employers to consider resolving employment disputes in a commercial way such as through a compromise agreement.  This is a clean way of resolving a dispute without protracted litigation but ensures that both parties can move on.

There are perhaps circumstances where weak claims do end up before the employment tribunal judge but these are usually where the individual concerned is not represented.  It is always sensible for employees to take advice from a solicitor as to the merit of a claim at an early stage.  By the same token, it is sensible for employers to have sound advice and not to be afraid of making the right decision.

The government is also introducing an employer's charter to remind companies that they are entitled to ask an employee to take a pay cut, or to withhold pay from a worker when they are on strike.  It is not clear how this will help to create jobs but it does demonstrate a shift towards empowering employers.

We are of course keen to hear your views and opinions about these proposed changes and how they may affect you.  In the meantime, you can read what the papers say here and here.

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