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23rd March 2012

BIS Publishes Annual Report on Employment Law Review

The Department for Business, Innovation and Skills (BIS) has published an annual report on the progress of the government’s Employment Law Review.

The report summarises the areas of employment law which will be changing or are currently under review.  The report notes that according to the Organisation for Economic Co-operation and Development (OECD), the UK has one of the most lightly-regulated labour markets amongst developed countries, with only the US and Canada with lighter overall regulation.  However, in its annual report BIS confirmed that it is committed to a Parliament-long review of UK employment laws to ensure they provide the flexibility that businesses need to grow, without compromising fairness for employees.

Along with maximising flexibility for both employers and employees while protecting fairness and providing the competitive environment require for enterprise to thrive, the ongoing review also aims to tackle perceptions about employment law and dispel myths about what employers can or cannot do in the workplace in managing their staff.

The recently published BIS report confirms that reforms due to take place in April 2012 include:

Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order 2012 (Employment Rights Act 1996): Employees starting new employment from April 2012 must be employed at their workplace for a minimum of two years before they are able to make a claim for unfair dismissal.  The BIS report claims that this will lead to a reduction of around 2,000 Tribunal claims per year, resulting in a net direct benefit to employers of around £4.7 million per annum.

The Employment Tribunals Act 1996 (Tribunal Composition) Order 2012: Amending the composition of employment tribunal hearings for unfair dismissal cases to be heard before a judge sitting alone rather than a tripartite panel.

Amendments to Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004: Amongst other things, this will allow judges to increase the maximum limit at which deposit orders can be made from £500 to £1,000; to increase the maximum limit at which judges can award costs to either party from £10,000 to £20,000; to allow witness statements to be “taken as read” – meaning that a witness statement will not be read out in its entirety, unless a judge orders otherwise.

Although the above changes will be implemented within the next few weeks, the BIS report also highlights areas where change is likely to occur over the next 12 months.  In particular, the report notes that BIS is committed to facilitating change in the following areas:

Compromise Agreements: Responding to evidence from the Resolving Workplace Disputes consultation, BIS intends to produce a ‘model agreement’ to address concerns from some employers regarding the cost and approach of compromise agreements.

Financial Penalties: Again responding to the outcome of the Resolving Workplace Disputes consultation, the report indicates that the Government will proceed to introduce a provision for employment tribunals to levy a financial penalty on employers found to have breached employment rights.

Protected Conversations: The report confirms that the Government is considering how best to encourage open and frank conversations between employers and employees and is developing proposals for a consultation process later this year – one option would be to introduce a system of protected conversations where the content of that conversation cannot later be used against an employer at an employment tribunal.

In addition to the proposals set out above, the BIS report also highlights that within the coming months it shall be seeking evidence in relation to other areas of employment law in order to determine whether change is necessary.  The areas currently being considered for future review include: the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE); dismissal processes; whistleblowing; the recruitment sector; The Agency Workers Regulations; National Minimum Wage; a review of discrimination awards and sickness absence.  It is hoped that once the plans for future review have been finalised they will be reported in a future edition of Lighthouse.

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