Current Developments in UK Employment Law
By Martin Warren
Posted: 17th May 2013 09:11The UK general election of 2010 led to a centre-right coalition. The Coalition Agreement contained commitments to reform employment law and cut red tape, as well as promises to introduce new family friendly and equality rights for employees.
Fast forward three years and some progress has been made in reforming employment law. However, there is a frustration amongst some employers at the constant stream of Government consultations and policy announcements which have the tendency to confuse rather than clarify workplace rights and responsibilities.
Recent Changes to UK Employment Law
In terms of progress to date, the following changes have been made:
- The qualifying period before an employee can claim unfair dismissal increased from one to two years.
- The default retirement age was removed meaning that now an employer has to justify any decision to retire someone against their wishes to avoid falling foul of age discrimination and unfair dismissal laws.
- The 90 day consultation period, during which employers are required to consult with employee representatives in the event of large-scale lay-offs, has been reduced to 45 days and the expiry of fixed term contracts excluded from the scope of such consultation.
The halving of the 90 day consultation period has been welcomed by employers. In a survey of our clients, over three-quarters of respondents supported a reduction with many expressing the view that it can inject excessive delay at a time when employers may need to act with urgency to sustain a business.
In contrast, with many employers feeling compelled to abandon mandatory retirement following the removal of the default retirement age, our survey revealed that 47 per cent of respondents wanted the default retirement age reinstated. The chances of this happening under the present Government are slim.
Forthcoming Changes to UK Employment Law
Looking ahead, there are further changes to employment law due to be implemented over the next three years. They span a range of topics including reforms to whistle-blowing and directors’ pay, changes to workplace dispute resolution and employment tribunal practice, the introduction of employment tribunal fees and employer penalties as well as shared parental leave and are summarised below:
From June 2013, disclosures must be in the public interest if whistleblowers are to be protected against victimisation under employment law. With a view to countering any deterrent effects of this change, disclosures will no longer need to be made in good faith. More significant for employers is a new liability being introduced for any bullying or harassment of whistle-blowers by colleagues. Unless an employer has taken reasonable steps to prevent this, it will be deemed liable. It is vitally important, therefore, that employers have a policy in place to protect genuine whistle-blowers and communicate this to the workforce.
There are a number of changes in respect of directors’ pay within quoted companies, involving greater in-put from shareholders. The changes are expected to come into force in October 2013 and require companies’ remuneration policies to be approved by shareholders at least every three years and payments to directors to accord with the approved policy or be approved by shareholders.
Workplace dispute resolution
The Government is attempting to make it easier for employers to broach agreed terminations with employees, where an employment relationship is not working out, safe in the knowledge that such negotiations cannot be disclosed during an unfair dismissal claim to a tribunal (should the employee bring a claim, if, for example, the negotiations fail). Unfortunately, the legal change to make this happen is far from straightforward and exposes the employer to satellite litigation. As such, many employers may be discouraged from relying on the new law until case law provides some clarity.
In addition, from spring next year, most prospective claimants will be required to contact Acas (an independent state-funded organisation devoted to preventing and resolving employment disputes) before they can lodge employment tribunal proceedings. The Government’s hope is that by involving Acas in this way, more workplace disputes will be conciliated away from an employment tribunal.
Employment tribunal practice, including new employer penalties and fees
Various changes are being made to employment tribunal practice this summer with the aim of delivering robust case management powers and the efficient handling of employment claims. This reflects widespread criticism of employment tribunals, particularly from employers, for being inconsistent and failing to address weak and vexatious claims.
In addition, the Government is seeking to transfer some of the cost of running the tribunal system from the taxpayer to those who use the system. It is hoped that introducing fees, primarily paid by claimants and not employers, will also encourage settlement at the earliest opportunity.
These and other related employment law changes are expected to change the conduct and outcome of workplace disputes for the better. Until they bed down in practice, it is unclear how successful they will be, for example if tribunals disappoint employers by failing to adopt a more robust approach to unreasonable claims.
One of the least popular changes for employers is the introduction, from spring 2014, of financial penalties for those found to have breached employment rights. The starting point for determining the penalty is 50% of the compensation awarded, subject to a minimum sum of £100 and maximum of £5000.
Shared parental leave
Sweeping changes to maternity and adoption leave arrangements are planed from 2015. Under the proposed new regime, the mother of a new baby will still be entitled to 52 weeks’ maternity leave and 39 weeks’ statutory maternity pay. However, at any point more than two weeks after the birth she will be able to convert any remaining maternity leave and pay into shared parental leave. This new type of leave and pay will be available for the two parents to share, taking it in turns or taking time off together, although only employees with at least six months’ service will qualify. Where eligible, adopters will also be able to take shared parental leave.
The Government has also promised to extend the right to ask for flexible work arrangements to all employees, not just parents and other carers, from 2014.
While shared parental leave marks a bold move away from the current highly gender-based approach to parental leave, few employers will look forward to yet another overhaul of this complex area of employment law.
The Government is also reviewing UK TUPE law which regulates employment rights in the event of certain business sales and transfers. It has consulted on a number of highly technical changes, including repealing the law which applies TUPE to many outsourcing situations, with the aim of implementing any changes later this year.
Employers will welcome many of the changes being brought forward by the Government as part of its Employment Law Review. In particular, halving the 90 day redundancy consultation period and upcoming measures to improve employment tribunals and encourage the informal settlement of disputes.
In response, employers need to prepare for the changes by amending their own policies and ensuring staff are properly trained, particularly in relation to whistle-blowing and, in due course, flexible working and shared parental leave; checking directors’ pay and termination payments for compliance (listed companies only); and reviewing whether their current settlement and employment litigation practices are still appropriate.
Martin Warren is Practice Group Head for Eversheds Human Resources Group. Although now responsible for over 200 Employment, Labour and Pensions Lawyers across the UK and Europe, his personal practice remains advising Corporate clients on all aspects of trade union law.
He has significant experience of restructuring and redundancy exercises conducted in the teeth of opposition from trade unions, notable cases include successfully defending litigation against Hoover in 1988-1990 following a redundancy exercise involving 400 job losses, advising the Stationery Office on its restructuring following its sale to the Private Sector in mid 1990s and successfully defending litigation resulting from the circa. 1000 redundancies declared in the first six months following privatisation.
Throughout the 1990s he was active in the Industrial Sector, in particular, advising Corporations such as British Alcan Aluminium and the Luxfor Group on multiple restructuring exercises. The most notable example from this era was the successful exercise to change the terms and conditions of unionised employees at British Alcan's Kitt Green Plant near Birmingham which resulted in one of the largest cases, involving 305 employees, ever to be heard by an Employment Tribunal. Following a hearing which lasted a month, the dismissal and re-employment of the entire work force was found to be a fair process.
With the return to power of a Labour Government in 1997 he has been involved in a number of the leading trade union recognition cases and for companies such as General Electric, Ryanair, Virgin Atlantic Airways, Mission Foods and Calor Gas.
He is currently working with a number of large Corporations advising on Global Labour relation strategy, European Works Council issues and International Framework Agreements.
He regularly comments on labour relations issues in the mainstream media (BBC TV and Radio, Financial Times and The Times). He is a member of the American Employment Law Council, the Labour and Employment Relations Association and Chairs the CBI Employment Policy Forum.