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Government's Propiosals on Employment Law

Meredith Hurst Friday, November 25, 2011

The Government's response to its 'Resolving Workplace Disputes' consultation provides further detail of its reasoning in relation to already announced decisions such as the increase in qualifying period for unfair dismissal claims. The response also contains a number of reforms not announced in Vince Cable's speech to the EEF, such as plans to allow employment judges to sit alone in unfair dismissal cases, and judges to sit alone in the EAT, and to allow tribunals to award costs of up to £20,000 against vexatious claimants. Where possible, the Government intends to implement the changes in April 2012.

The increase in the qualifying period for unfair dismissal is one of the most controversial employment law decisions yet announced by the Government. In the response the Government explains that, although the majority of consultation respondents disagreed with the proposal, it considered that business stakeholders, who were supportive of the move, were best placed to evaluate its likely impact on job creation. Although the Government accepted that an increased qualifying period would not reduce the number of claims by as much as it had originally forecast, it did not think it would lead to an increase in discrimination claims, as there is little evidence that, where there are grounds for a discrimination claim, individuals currently choose to pursue an unfair dismissal claim instead.  The Government rejected only increasing the qualifying period for small businesses on the basis that 'there does not appear to be strong evidence that small businesses are disproportionately affected by unfair dismissal rules'.

The Government also accepted that the increase in qualifying period would have a degree of disparity of impact on various groups. However, it did not consider it would cause a considerable disparity of impact on any particular group. Furthermore, extending the qualifying period was a proportionate means of achieving the legitimate aim of improving business confidence to recruit and retain staff. The Government has committed to monitoring the impact, including the equality impact, of the increase as part of its overall assessment of the implementation of the Resolving Workplace Disputes proposals.

The response also indicates that, at the earliest opportunity, the Government will allow employment judges to hear unfair dismissal cases alone, unless they direct otherwise. The proposal has been adopted, despite a negative consultation response, so as to ensure maximum value for money to taxpayers. The Government will use pending academic research on the value of lay members to evaluate the first year of judges sitting alone in more cases, to see whether a reversal or extension of the policy is necessary.  It will also alter the default constitution of the EAT so that judges will always sit alone unless they direct that members should be involved. The Government states that the cost savings justify the move given that appeals to the EAT are on a point of law with no fact finding role for judges or members.

The Government also intends to allow tribunals to levy financial penalties, payable to the Exchequer, on employers found to have breached employment rights where the employer's behaviour in committing the breach had 'aggravating features'. The Government expects penalties will be imposed where the breach involves unreasonable behaviour, e.g. negligence or malice. The financial penalty will be half the amount of the total award with a minimum threshold of £100 and an upper ceiling of £5,000. Where a non-financial award has been made, a tribunal can ascribe it a monetary value to enable a financial penalty to be made. The penalty will be reduced if there is prompt payment, by 50 per cent if paid within 21 days. 

Other measures contained in the Government's response include:

  • increasing the limit for deposit orders from £500 to £1,000
  • increasing the limit for cost awards from £10,000 to £20,000
  • requiring witness statements (where provided) to be taken as read, unless a judge or tribunal directs otherwise
  • granting tribunals the power to direct parties to bear the costs of witnesses' attendance, where a witness has attended pursuant to a witness order; and that the party ultimately losing a case should reimburse the successful party for any such costs already paid out
  • clarifying S.147 of the Equality Act 2010 to address uncertainty as to the validity of compromise agreements covering discrimination issues.

The regulations to implement proposals in relation to increasing the maximum amounts for costs and deposit orders, witness statements, witness expenses, judges sitting alone in unfair dismissal cases and extension to the unfair dismissal qualifying period will be brought forward shortly. The Government intends these regulations to have effect from April 2012, subject to Parliamentary procedures.