These employment law reforms strike just the right balance
Proposals by the government to reduce the maximum amount of compensation for unfair dismissal claims could end up being just enough to discourage spurious claims while preserving access to justice for those who are treated unfairly by their employer.
Under the current regime, most employers believe that the balance of the law is in favour of the employee when it comes to unfair dismissal claims. After all, the prospect of securing a compensation award of anything up to £72,300, for a claim which is free to pursue, can be hard to resist for a disgruntled employee who has just lost their job. Furthermore, the fact that employees can lodge a claim without even raising their complaint with the employer beforehand adds to the sense of unfair bias in the current system.
The proposals set out by Business Secretary, Vince Cable, which are now subject to consultation, will go some way to re-balance the situation, while protecting every employee’s right to access justice. Of course, the Government will also be hoping that the changes will also make employers feel a bit more confident about hiring new staff.
The most noteworthy change proposed is the move to reduce the compensation award for unfair dismissal and cap it at one year’s salary. This seems a sensible proposal, which, when combined with the new payments that employees will be required to make when bringing a claim from next April, should be sufficient to discourage most spurious claims.
The proposed use of ‘settlement agreements’ that allow staff to agree to leave their employer with a pay-off and no threat of a tribunal case, may also be useful. However, employers shouldn’t be tempted to use these agreements too readily so that they avoid creating an impression that the employer will manage exits with a cheque. The law is there to be used and employers should remember that they still have the right to address performance issues openly and directly with members of staff and to make dismissals where necessary.
The biggest positive linked to the use of ‘settlement agreements’ is likely to be its encouragement for employers and employees to discuss and resolve performance-related issues at an earlier stage, which should ultimately minimise the frequency of workplace disputes.
One recommendation made by the Beecroft Review that Cable has confirmed is definitely not going ahead is the introduction of no-fault dismissals. Clearly, it was felt that this would be a step too far and could compromise workers’ rights. Businesses need to feel more confident about taking on more staff, but permitting them to fire at will would ultimately have a negative impact on the world of employment.
Another significant part of the announcement is the proposed streamlining of the employment tribunal system. As most users know only too well, the system is in urgent need of an overhaul. The powers of filtration that exist are currently under-used and the system itself is seriously under-resourced. An ineffective tribunal system is in nobody’s interest and hopefully lessons can be learned from the Employment Appeal Tribunal system which is altogether more robust and user-friendly.
All in all, these proposals seem to have been well-considered and while only time will tell, they appear to have struck just the right balance in terms of freeing employers to recruit without fear of blocking workers’ access to justice.Tagged in: Employment Law, Unfair Dismissal, Vince Cable
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