This article was originally written for and published in Director of Finance.

Summary of where we are with the various Government consultations into simplifying/updating employment law.

We were bombarded through the autumn with news of the Coalition’s proposals on reforming employment law via various initiatives and from various government departments. As a result there are currently a number of consultations currently underway.  It is difficult to keep up-to-date on what is going on so to make the life of a busy HR professional a little bit easier, we have compiled an update on the current open Government consultations.

Consultation on Ending the Employment Relationship

This consultation is due to close on 23 November 2012 and deals with a number of issues surrounding the end of an employment relationship:

  • Settlement agreements: the Government are proposing to make offers of settlement inadmissible in unfair dismissal claims. It is intended that the ‘without prejudice’ rule will be amended by statute so that offers of settlement will not be admissible as evidence in unfair dismissal cases, even if there is no “dispute” which has arisen at the time of making the offer. This will not be offered in discrimination or whistle blowing claims. The consultation seeks views on the principles underpinning the concept that certain “without prejudice” would be inadmissible in later claims, as well as in relation to the introduction of template settlement agreements and model offer letters to be used during the settlement process.
  • Cap on unfair dismissal awards: the Government intends to curb future above-inflation increases to the cap by amending the up rating formula. The consultation seeks views on whether the cap should be decreased (to around £26,000) so as not to encourage unrealistic perceptions of tribunal awards.
  • Statutory code of practice: in conjunction with the change to the “without prejudice” rules, the Government is proposing that an ACAS Code setting out principles for the use of settlement agreements will be introduced. The idea is that if employers follow the approach set out in the Code, they can be certain that they are not exposing themselves to greater risk.
  • Guideline tariff on settlement agreements: the Government is seeking views on whether there should be a guidance tariff regarding the amount offered to employees as part of a settlement agreement.

Consultation on implementing Employee–Owner Status

This consultation is in relation to the controversial Coalition proposal that employees should be offered shares in their employer worth between £2,000 and £50,000 which will be exempt from capital gains tax, in exchange for giving up some of their employment rights. The Consultation closed on 8 November 2012.

  • Employee-owner status: the Government is proposing to create a new employment status of “employee owner”, this will be in addition to the current workplaces relationships with individuals who have the status of worker, employee or self-employed contractor. The Consultation seeks views on the use of different statuses and how flexibility can be improved for businesses.
  • Restrictions on and buy-back of employee-owner shares: the Government is not seeking to amend current corporate law rules in relation to shares, but is seeking views on restrictions which should be possible in relation to the shares and how any buy-back system should be practically operated in relation to valuations, etc.
  • Excluded employment rights: employee-owners will have most of the same rights as current employees on termination of employment except that they will not have the right to claim unfair dismissal (except where this is automatically unfair or relates to anti-discrimination law). The Government asks for views as to how much advice and guidance individuals and business would need to be fully aware of the implications of this and the points set out below. The Government is also asking business to comment on how these points would affect their appetite for recruiting.
  • Reduced rights in relation to flexible working, training and longer notice to return from maternity/ adoption leave: the Government is proposing to reduce to a minimum certain rights to request flexible working and training. Individuals will also need to give longer notice to return from maternity leave or adoption leave.
  • No right to statutory redundancy payment – the Government is also seeking views on the impact for businesses that removing a right to statutory redundancy pay will have for smaller and start-up businesses.

Employment Tribunal Rules

This 10 week consultation seeks views on Mr Justice Underhill’s recommended changes to the existing ET rules and closes on 23 November 2012:

  • Effective case management, such as simplified and streamlined procedures for preliminary hearings and withdrawing cases.
  • Reform of the costs regime
  • New Tribunal guidance which is intended to provide all parties a better idea of what to expect and what is expected of them at tribunal.
  • New powers in relation to dispute resolution: a stand alone rule that gives tribunals a clear mandate to encourage and facilitate the use of alternative forms of dispute resolution at all appropriate stages of the Tribunal process.
  • Changes to time limits and interest: the Government is proposing legislative changes to encourage prompter payment, including setting a time limit and providing for interest to start accruing at an earlier point.

As ever, the field of employment law is changing fast, so it is worth keeping an eye on the news regarding the outcome of the above consultations. Despite lots of proposals for change, there is still hope that all of these proposed changes will not make life harder for your business.

The Government have announced that they intend to reduce ‘red tape’ with ‘one-in, two-out’ regulation rule which will apply from January 2013. This will mean that every new regulation imposing new financial burdens on businesses must be counteracted by a corresponding reduction in red tape to save twice those costs. If you would like to have your say and put your businesses’ views to the Government, the above consultations can be accessed at the Department for Business Innovation & Skills website.

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