‘Much To Ponder’ On Government’s Employment Law Review Plans

Specialist Considers Impact Of Red Tape Reductions

12.05.2011

Employers have been warned they will have “much to ponder” following the government’s announcement that it is reviewing employment legislation including compensation for discrimination and redundancy rules.

Chancellor George Osborne and employment relations minister Ed Davey have confirmed that the Transfer of Undertakings (Protection of Employment) – or TUPE – is also set to be considered as part of its efforts to reduce red tape faced by a number of organisations.

Tom Flanagan, Head of Employment Law at national law firm Irwin Mitchell, said the announcement has been met with scepticism, particularly as no clues have been offered in relation to the possible changes.

He explained: “There is much to ponder in relation to the suggested reforms and we might as well get used to the idea that something is likely to happen.

“The ‘wish list’ of proposals put forward is one that many suggest cannot be achieved due to the UK’s membership of the EU. However, it’s arguable that some of these proposals are achievable even within the constraints of European law.

“Ironically, I believe that other suggestions do not go far enough to achieve the government’s stated aims.”

Discussing the fundamental areas which will be considered in detail as part of the ongoing review, Tom stated that a principle of appropriate remedies for European rights is that they should be ‘effective, proportionate and dissuasive’.

On that basis it is arguable that a cap on compensation in discrimination cases of around two years’ loss could be satisfactory in most cases.

However, he added: “That would not mean that all claimants would be entitled to that level - damages are still based on loss. Also, if there were some categories of claims for which that ceiling would be manifestly inappropriate, they could be excluded from it.

“Already, in many types of discrimination claims, advisers are citing that level of risk as a realistic maximum exposure. A principle of appropriate remedies for European rights is that they should be ‘effective, proportionate and dissuasive’.”

On the suggestion that collective redundancy rules are impacting on the ability of employers to restructure, Tom said that many organisations are simply calling for both standardisation and clarity.

“The first could be addressed by standardising the minimum consultation period to, say, 45 days, instead of the either 30 or 90 which depends on the size of the exercise. That has been debated before and is achievable,” he suggested.

“In addition, how the different trigger points in a collective redundancy interact needs to be clarified, such as when consultation starts and ends, when notice to terminate can be given and ends, as well as how these collective rights dovetail with individual consultation.”

Discussing claims that the TUPE rules are currently ‘gold-plated’, Tom said that while the basic premise of regulations cannot and should not be removed, there are still elements that can be reviewed in line with EU obligations.

He said: “This area is a particularly complex one. For instance, the clarifying concept of a "change of service provider" was welcome but it did not need the creation of a new legal animal - a different category of transaction.

“However, there could be some clarity given to the thorny issue of harmonising terms of employment after a transfer, as the current regulations are somewhat circular in their approach.”

Finally, on potential unfair dismissal changes, Tom said that there are inherent difficulties in increasing the qualification period for a claim to two years.

He added: “Perhaps more boldness would create benefits for employers and employees, like a "no fault liability" system in relation to dismissals, with a clear tariff of payments which could create certainty, cut claims and costs and – where a claim could still arise – it would be quicker and easier to resolve.”

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