Workplace Dispute Reforms & the Employers’ Charter Announced

Employers' CharterThe coalition government has today announced the next stages of its comprehensive review of employment laws alongside their new Employer’s Charter which has finally been published.

Figures from 2010 show that employment tribunal claims rose to a record 236,000 last year – an all time high and up by 56% on the employment tribunal figures for 2009. It is estimated that it costs businesses around £4000 on average to defend against a claim and many small businesses have raised concerns that the tribunal system has become costly. Amongst the issues flagged up by SMEs, the cost and time taken are primary concerns with the stress of the claim and the ease with which vexacious claims can be made also being mentioned.

Speaking about the new direction in workplace dispute reforms, Prime Minister David Cameron said:

"A critical element of the Government’s growth strategy is to create the conditions which allow businesses, especially smaller businesses, to flourish and expand, by reducing regulation and maintaining a flexible and dynamic labour market.

“Today’s announcements on reforms to employment law are among the first conclusions of our government-wide growth review, and highlight our determination to ensure that employment law is no longer seen as a barrier to growth, while making sure that employees and employers are treated fairly.

“Giving businesses the confidence to take on somebody new will be a real boost to the economy, and help generate the sustainable growth we need."

Business Secretary Vince Cable added:

“Disputes in the workplace cost time and money, can affect morale, reduce productivity and hold back businesses. We often hear that knife-edge decisions about whether to hire new staff can be swung by concerns about ending up in an employment tribunal if things don’t work out. Today’s proposals address these concerns and should help give employers more confidence.”

“But let’s be clear – resolving disputes earlier is also in the interests of workers. No one wants to spend month after month worrying about a claim – we need to make what can be an extremely stressful time in people’s lives as short as possible.”

“In the business world there is also a common misconception that employment protections are all one-way – towards the employee. The Charter we are publishing today tackles this myth by setting out clearly some of the most important rights that employers already have in the workplace.”

The Government intends to enable workplace disputes to be resolved as early and as easily as possible. The key proposals set out in its consultation published today are:

  • Giving businesses greater confidence to hire new staff by increasing the qualifying period for employees to be able to bring a claim for unfair dismissal from one to two years – this will also ultimately reduce the number of disputes that go to Employment Tribunals;
  • Encouraging parties to resolve disputes between themselves as early as possible – requiring all claims to be lodged with Acas (Advisory, Conciliation and Arbitration Service) in the first instance to allow pre-claim conciliation to be offered. This also includes introducing settlement offers to encourage parties to make reasonable offers of settlement to avoid Tribunal hearings and encouraging parties to consider other forms of early dispute resolution such as mediation;
  • Speeding up the tribunal process – extending the jurisdictions where judges would sit alone to include unfair dismissal, introducing the use of legal officers to deal with certain case management functions and taking witness statements as read. This will result in Employment Tribunal resources being used more efficiently and allow cases to be listed and heard more quickly, saving time and cost; and
  • Tackling weak and vexatious claims – providing the Employment Tribunals with a range of more flexible case management powers so that weaker cases can be dealt with in a way that does not mean disproportionate costs for employers.

There is also a commitment for the Ministry of Justice to consult separately on introducing fees for Employment Tribunal cases and appeals, to ensure that users contribute towards the cost of running the system.

Justice Secretary Kenneth Clarke said:

"It’s in everyone’s interests – employers, employees and taxpayers – to have a dispute resolution system that is efficient, simple to use and supports the employment relationship.

"We have heard clear calls from users for reform to the Employment Tribunal system, particularly the need to ensure robust powers and procedures are in place to deal with claims more efficiently, more effectively and – importantly – more proportionately.

"So I will be working closely with colleagues across Government to get this package of proposals implemented as quickly as possible, and I will also be consulting separately later in the year on the detail of introducing fees for Employment Tribunal cases, to ensure that people who use the system contribute towards its cost."

The consultation document also includes proposals to:

  • Increase the provision of information – aimed at reducing speculative claims, this would require more information on the nature of the claim being made and to include a statement of loss. It will help parties to decide whether to agree a settlement offer or proceed to a Tribunal hearing;
  • Withdraw the payment of expenses – encouraging parties to either settle earlier or reduce the number of witnesses they call; and,
  • Introduce financial penalties for employers found to have breached rights – aimed at encouraging greater compliance from employers and thus a reduction in the number of Tribunal cases.

The intention of the Charter is to raise awareness and give clarity amongst employers on what they can and can’t do when managing their staff and covers a wide range of employment law issues.

The employment law review is taking a comprehensive look at employment legislation across government. In the next few months, we will consider the requirements on employers when they take on staff to ensure that it is as simple and straightforward as possible. As part of this, we intend to publish a model contract for employers shortly.

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