This article was included in the spring/summer 2011 issue of People - the employment and pensions newsletter.
Irrespective of your political allegiances, there is no denying that, since the election last May, the Coalition Government has announced potentially far-reaching changes to employment law. But, one year on, what does the future hold for employers? We chart the Government's key announcements over the last year, highlighting the main issues for employers.
Employment law review
When the Coalition Government delivered the Budget in June 2010, it announced an immediate review of employment law, to ensure maximum flexibility, protect fairness and promote competitiveness. It confirmed that changes to employment law would be made as part of its one-in-one-out approach to regulatory reform. For those who have been tracking the Government's plans, it is clear that the employment law review has already had an impact on a number of areas. We outline below the key consultations, reviews and repeals, together with the Government’s efforts to reduce red tape.
Subject to consultation
There are currently two key areas on which the Government is consulting, which will have a major impact on the wider employment law landscape: workplace disputes and flexible parental leave. Often, when issues are at consultation stage, the immediate impact on employers can seem quite far removed. However, the Government’s proposals in both these areas are likely to have a significant effect on employment litigation and flexibility in the workplace, which are key issues for most employers.
The Department for Business, Innovation and Skills and the Tribunal Service jointly published a wide-ranging consultation, considering how to encourage the early resolution of workplace disputes. It also published an "Employers Charter", designed to give businesses more confidence to take on workers and support growth. The key proposals are likely to introduce major changes to employment dispute resolution and, in the main, have been welcomed by employers. The proposals include encouraging earlier dispute resolution, tackling weaker cases (e.g. increasing the deposit and cost limits for weak and vexatious claims from £500 and £10,000 to £1,000 and £20,000 respectively) and introducing fee charging mechanisms in Employment Tribunals.
Interestingly, the Government also plans to introduce a power for Employment Tribunals to impose financial penalties on those employers found to have breached an individual's rights. More welcome by employers, however, is the proposal to increase the qualifying period for unfair dismissal from one to two years. This proposal is particularly controversial and it remains to be seen whether the increase would, as the consultation document states, result in 3,700 to 4,700 fewer claims going to Employment Tribunal.
Flexible parental leave
The Government has just announced its plans to create a system of flexible parental leave and also extend the right to flexible working to all employees. The proposals are potentially far-reaching and are covered in further detail in our article "Flexible parental leave on the horizon".
Not long after the election last year, the Government confirmed that that the Agency Workers Regulations 2010 (the Regulations) would be reviewed, as it was aware of "the different points of view expressed by the business community about certain aspects of the Agency Workers Regulations". Following this review, however, the Government confirmed that no amendments would be made to the Regulations and they would come into effect on 1 October 2011. Earlier this month, the Department for Business, Innovation and Skills also published the final guidance for hirers and agencies on the Regulations.
The Government has also initiated other reviews and reports over the last year. For example, in June 2010, the Government commissioned a review of fair pay in the public sector. The final report was published in March 2011 and sets out a number of proposals for senior public service pay (e.g. linking it to performance through a system of ‘earn back’ pay; improving transparency and a recommendation that public limited companies also track and publish their pay).
The Government commissioned another report last year, to consider increasing the number of women on the boards of UK listed companies. Published in February 2011, the "Women on Boards" report recommends that FTSE 350 companies should be setting their own targets for 2013 and 2015 to ensure that more talented and gifted women can get into the top jobs in UK companies.
In February 2011, the Government also called for a major review of the sickness absence system. Sickness absence is significant challenge for employers in both the public and private sectors and the independent review will explore radical new ways on how the current system can be changed to help more people stay in work and reduce costs. The final report is due to be published later this year.
The Coalition Government confirmed earlier this year that it would remove the default retirement age (DRA) of 65 and proceed with its plan to phase it out from 6 April 2011 (subject to transitional provisions). It also published new ACAS guidance, intended to help businesses adapt to the removal of the DRA.
The Government also published a "Plan for Growth" in March 2011, stating that it would scrap proposals for specific regulations that would have cost businesses over £350 million a year to implement. It confirmed that it would:
- not extend the right to request time to train to businesses with fewer than 250 employees;
- not bring into force the dual discrimination provisions in the Equality Act 2010; and
- repeal the extension of the right to request flexible working to parents of children under 18. The Government stated, however, that it would remain committed to extending the right to request flexible working to all employees (see above). It stated this small extension to the flexible working regulations could be an "unhelpful complication" and the repeal would also avoid multiple changes to the flexible working regulations over the coming years.
Red tape and regulations
As part of its efforts to reduce the burden of regulation, the Government confirmed in March 2011 that it would introduce a moratorium exempting micro and start-up businesses from new domestic regulation for three years from 1 April 2011.
The Government also recently announced that it will consider reforming other areas as part of its review of employment red tape, including collective redundancy consultation periods, TUPE and compensation for discrimination awarded by Employment Tribunals. The Government will start reviewing these areas this year. Significantly, it states that "legislation will not necessarily be the root to implement any change if there is a case for reform". It remains to be seen to what extent the Government can introduce changes, given the application of European law in these areas.
Watch this space
In the last 12 months, the Government has, through various consultations, reviews, repeals and a commitment to reducing red tape, already introduced wide-ranging changes to employment law. It is impossible to know, at this stage, how many areas will be truly reformed under this Government. However, it cannot be denied that it has targeted key areas of concern for employers, not least the increasing costs associated with employment law. It is now a matter of watching this space to see whether the Government's many proposals will in fact bring about positive change for employers.
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