Reforming employment law – Government proposals

On 23 November 2011, Vince Cable, Secretary of State, delivered a speech outlining the Government’s proposals to “radically” reform employment law. The proposals, intended by the Government to “safeguard workers’ rights, while deregulating to reduce the onerous and unnecessary demands on businesses,” include the following:

  • a requirement on all claimants to submit their complaint to ACAS before they can take it to a tribunal;
  • a system of “protected conversations” which will allow employers to discuss issues such as poor performance or retirement plans openly with employees without the fear of these conversations being used against them in subsequent litigation;
  • the simplification of compromise agreements;
  • a “Rapid Resolution” scheme as an alternative to a tribunal hearing (possibly involving an independent legal expert reaching decisions based on written evidence);
  • introduction of fees for claimants to take cases to an employment tribunal (with concessions for those who need financial assistance);
  • an increase to the qualifying period for unfair dismissal claims to two years;
  • a slimming down of existing dismissal processes (such as the ACAS Code on discipline and grievance procedures); and
  • the introduction of a compensated no-fault dismissal for small firms (10 or fewer employees).

In addition to the above, Vince Cable announced proposals to significantly reform employment legislation. Of the 159 regulations which were considered in the Red Tape Challenge, it is proposed to merge, simplify or scrap over 40%. The National Minimum Wage regulations are to be simplified, and reviews carried out of the Collective Redundancy consultation requirements and TUPE Regulations. Vince Cable also proposed in his speech an extension to the right to flexible working and modernisation of maternity leave so it becomes shared and flexible parental leave.

Most of the above proposals will now be developed and put out to consultation. Whatever the outcome of these consultations, the next few years are likely to be very interesting for managers, HR professionals and employment lawyers.

Creation of an Independent Assessment Service to deal with long-term sickness absence

The Government has published the results of an independent review carried out of the sickness absence system. The review recommended the creation of an Independent Assessment Service (IAS) which would be responsible for assessing employees who have been absent from work due to sickness for four weeks and providing recommendations on how the employees could be supported back to work. In addition, the review recommends the following:

  • the abolition of statutory sick pay record-keeping obligations;
  • a revision to fit note guidance (so that judgments about fitness to return to work are not specific to the employee’s job);
  • employer expenditure to keep employees in work (or assist returns to work) should attract tax relief (e.g. medical treatments); and
  • the abolition of the percentage threshold scheme which awards compensation to employers who have very high rates of sickness absence costs.

The Government will now issue a response to the review which will likely detail the recommendations it proposes to implement.

Increase to statutory maternity and sickness payments

The following increases to statutory maternity/paternity, etc. pay and statutory sick pay, to take effect from 9 April 2012, have been announced:

  • Statutory Maternity, Paternity, Additional Paternity, Adoption Pay and Maternity Allowance will be increased from £128.73 to £135.45;
  • Statutory Sick Pay will be increased from £81.60 to £85.85.

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