20 May 2011

Next steps in review of employment law published

The Government has announced new areas that it will consider reforming as part of its review of employment red tape – including collective redundancy consultation periods, the Transfer Undertakings Protection of Employment Regulations (TUPE) and compensation for discrimination awarded by employment tribunals. The ongoing review is an important part of the Government's plans to deliver growth by breaking down barriers, boosting opportunities and creating the right conditions for businesses to start up and thrive.

The Government will look in detail at the case for reforming:

Compensation for discrimination: There need to be remedies for discrimination, but employers have expressed concern about the high levels of compensation sometimes awarded by Employment Tribunals in cases of discrimination - and the lack of certainty they have about the level of award they may be required to pay. Compensation levels for cases of discrimination are unlimited and employers worry that high awards may encourage people to take weak, speculative or vexatious cases in the hope of a large payout. This can lead to employers settling such cases before they reach a Tribunal.

Collective redundancy rules: Employers are concerned that the current requirement that consultation over collective redundancy runs for a minimum period of 90 days is hindering their ability to restructure efficiently and retain a flexible workforce. Employers in financial difficulty worry about how long they need to keep paying staff after it has become clear that they need to let them go. They also claim it is not clear from the legislation at what point consultation on redundancies should start or end.

TUPE: These rules implement a European directive and protect employees’ terms and conditions of employment when a business is transferred from one owner to another. These rules offer important protections but some businesses believe that they are `gold plated’ and overly bureaucratic.

The Government will start reviewing these areas this year. It wants to ensure that the regulations are fit for purpose, and legislation will not necessarily be the route to implement any change if there is a case for reform.

As part of the review of employment law consultations have recently closed on simplifying the Employment Tribunal system and extending the period before an unfair dismissal claim can be brought. An independent review of the system for managing sickness absence has been commissioned and a review of the compliance and enforcement regimes for employment law has been launched.
The Government believes that a flexible labour market is not simply about making life easy for employers. It is also determined to help people who want to work. Next week it will launch a consultation on plans to extend the right to request flexible working to all employees and introduce a new system of shared parental leave from 2015 to make it easier for parents to work whilst bringing up a family.