The Coalition Government is in the process of undertaking an extensive review of employment legislation. One of the key purposes of the review is to assist with the economic recovery by deregulating and removing perceived flaws in the current system.

 

On 23 November 2011 the Secretary of State, Vince Cable, set out the government’s plans for reform. Mr Cable stressed that the Government is keen to ‘safeguard workers’ rights, while deregulating to reduce the onerous and unnecessary demands on businesses.’ It is hoped that the reforms will give businesses the confidence to create new jobs and thus stimulate economic growth.

 

On the same day the Department for Business Innovation and Skills (BIS) published its response to the Resolving Workplace Disputes consultation which focused on reforms to the employment tribunal system.

 

April 2012 will see a wave of changes to current employment legislation implementing some of the Government’s proposals. Further reforms are also envisaged in the near future.

 

The first wave of reform concentrates on the employment tribunal system in a bid to create a more efficient and cost effective service.

 

The following changes will be implemented in April 2012.

 

Currently an employee must be continuously employed for a period of 1 year before they can make a claim for unfair dismissal.  On 6 April 2012 the qualifying period will be increased to 2 years. This change will only affect employees who commence employment with a new employer on or after 6 April 2012. Those employees employed before 6 April 2012 will still be able to make a claim for unfair dismissal after 1 years’ continuous service with the same employer.

 

The rationale behind this change is to encourage employers to recruit more new employees and consequently improve economic growth.

 

If an employment tribunal considers that a claim or response has little reasonable prospect of success it can order that party must pay a deposit as a condition of being permitted to continue to take part in the proceedings. From April 2012 the amount which a tribunal will be allowed to order a party to pay by way of deposit will increase from £500 to £1,000.

 

Before making a deposit order the employment tribunal will still be required to assess the ability to pay of the party against whom the order is made.

 

In the employment tribunal costs do not ordinarily follow the event which means that the successful party does not necessarily have their costs met by the unsuccessful party.  The employment tribunal does however have the power to award costs against a party where it deems that their conduct has been vexatious, abusive, disruptive or otherwise unreasonable or the bringing or conducting of the proceedings has been misconceived.

 

From April 2012 though costs awards will still remain the exception rather than the rule, the amount which the employment tribunal will be able to award (without referring the matter to the county court for a detailed assessment) will double from £10,000 to £20,000.

 

 

From April 2012 all witness statements will be taken as read in the employment tribunal unless the judge directs otherwise. It is envisaged that this will reduce the length of hearings resulting in costs benefits for the parties and the tribunal.

 

The judge will have the power to direct that a witness should read their statement to the tribunal if they consider that there is a good reason for doing so.

 

From April 2012 state funding of witness expenses will be withdrawn. Currently parties and witnesses can claim reimbursement for expenses which they have incurred as a result of attending a hearing in the employment tribunal. At present recoverable expenses include travel costs and other allowances, such as loss of earnings, subject to certain limits.

 

The Government has decided that funding witness expenses is an avoidable strain on the public purse and from April 2012 the burden will shift from the tax payer to the parties and their witnesses.

 

 

From April 2012 unfair dismissal claims will be heard by a judge sitting alone unless directed otherwise. At present unfair dismissal cases are heard by an employment judge and two lay members.

 

The Government has announced that this particular change will be reviewed after 1 year.

 

 

From 1 October 2012 employers will be required to enrol eligible employees into a qualifying workplace pension scheme. This could be an occupational pension scheme, a workplace personal pension scheme or the National Employment Savings Trust. An employee will have the choice to opt out of membership to such a scheme but the default position will be that he/she is enrolled automatically.

 

This new requirement will be phased in over a period of 4 years and will start with larger employers from 1 October 2012.

 

For more detailed information please see our article ‘Pensions auto enrolment - No opt out for employers’ November 2011 which is also posted on our website.

 

 

The Government has indicated that it intends to make the following changes although no dates for implementation have been fixed.

 

 

It is proposed that it will be a requirement for claimants to submit their claim to ACAS for pre claim conciliation before making a claim to the employment tribunal. It is envisaged that the mediation period will last for 1 month. If pre claim conciliation is unsuccessful a claimant will then be permitted to issue a claim in the employment tribunal.

 

It is thought that the earliest the pre claim conciliation system will be implemented is April 2014.

 

 

It is proposed that the employment tribunal will be given a discretionary power to impose financial penalties on employers who lose claims.

 

The amount payable by a losing employer will be half of the total amount that the tribunal award to the successful party. This will be subject to a maximum penalty of £5,000 and a minimum of £100.  Where no financial award has been made the tribunal will have the power to decide a monetary value for the purposes of calculating the penalty.

 

The penalty is payable to the Government. It is proposed that an employer will be able to reduce the penalty by 50% by making payment within 21 days.  

 

For further information on any of the above reforms please contact one of our Employment Law team.

April 2012