The Government’s ongoing employment law reform programme

In this month’s E-News, we focus on the further employment law reforms proposed by the Government.

Vince Cable, the Business Secretary, has made a number of announcements on the Government’s ongoing employment law reform programme.

The proposals are aimed to give businesses more flexibility and reduce the “employment law red tape”. As a result of these measures, two consultation papers have been published.

1. Mr Justice Underhill’s review

This consultation paper focuses on the reduction in the cap on unfair dismissal awards and measures to encourage the use of Compromise Agreements to facilitate termination of employment.

The proposals will give the Government power to reduce the cap for unfair dismissal claims to limit the awards to the lower of 12 months’ pay or the statutory cap. The Government is considering reducing the current £72,300 cap to annual median earnings, which is approximately £26,000.

Whilst this proposal is welcome news for businesses, it will significantly affect those employees who are high net worth earners.

The Government has also been keen to look at ways of encouraging employment disputes to be settled rather than be litigated in the Employment Tribunal. The consultation proposals include provisions to change the name of Compromise Agreements to Settlement Agreements, and to also give employers more freedom to have discussions with an employee about a proposed termination deal outside the context of an existing dispute and not have those conversations used in evidence for future unfair dismissal claims.

The proposals suggest that there will be a statutory ACAS Code of Practice on Settlement Agreements, which will include:-

  • A model Settlement Agreement and guidance notes;
  • Model letters that employers can use to propose settlement terms in a variety of situations.
  • A guideline tariff to help parties to agree severance payments.

2. The second consultation paper relates to reforms in relation to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE)

The Government has published a consultation document to cover:-

  • whether the service provision change should be retained or re-appealed;
  • whether liability for employers should pass entirely to the transferee as it does now, or whether the transferee and transferor should be jointly and severally liable, which is the current position for claims for failure to inform and consult.
  • whether employee information should be provided earlier to the transferee. At the moment, employee information is provided 14 days prior to the transfer which does not provide the transferor sufficient time to assess the employee’s information and determine whether measures are envisaged which then trigger the obligation to consult;
  • whether an amendment to TUPE would be possible to ensure that a change of location of the work place is capable of constituting and economic, technical and organisational reason in entailing change of the workforce.

We will be reviewing these consultations and providing further updates as and when they arise. We will also be covering further detail of these changes in our annual November seminar which you are invited to attend.

In the meantime, if you have any questions, then please do not hesitate to contact Sejal Raja on sejal.raja@rlb-law.com

Sejal Raja
e: sejal.raja@rlb-law.com
t: 020 7227 7410
© RadcliffesLeBrasseur


Disclaimer

This briefing is for guidance purposes only. RadcliffesLeBrasseur accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.