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23rd May, 2011

Government extends employment law review and launches new consultation on “Modern Workplaces”

The coalition Government has recently announced that it will extend its review of employment law to include three areas which employers have highlighted as being particularly problematic: collective redundancy consultation, compensation in discrimination cases and employee protection on the transfer of undertakings. However, any proposed reforms may face obstacles in the form of existing European law. In addition, the Department for Business Innovation and Skills (“BIS”) has launched a new consultation document entitled “Consultation on Modern Workplaces” containing proposals relating to flexible parental leave, flexible working, working time and equal pay.

As part of the Government’s drive to boost economic growth in the UK, it has announced several initiatives that are designed to reduce the regulatory burden on businesses and reform aspects of employment law. Included among these initiatives was the publication of a “Plan for Growth” alongside the 2011 Budget, as reported in the previous edition of The Tribunal, which outlined a vision for deregulation. The Government has also recently launched reviews of the Employment Tribunal system and sickness absence.

On 11 May 2011, the Employment Relations Minister, Ed Davey, detailed three further areas of employment law to be reviewed:

  • Collective redundancy consultation periods. Under the existing law, an employer proposing to make more than 100 employees redundant in a 90-day period must begin consultation with affected employees at least 90 days before the first dismissal takes effect. It has been proposed that the consultation period be reduced to 30 days.
  • Discrimination compensation. Unlike in unfair dismissal cases, there is currently no statutory cap on the level of compensation that may be awarded by an Employment Tribunal in discrimination cases. An upper limit on compensation has been proposed in order to reduce potential liability for employers and deter employees from bringing unwarranted claims.
  • Transfer of undertakings. The Government stated as recently as November 2010 that it had no plans to reform the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE 2006”). However, employers have expressed concerns that the domestic rules go further than is necessary under the Acquired Rights Directive and are overly bureaucratic, prompting Ed Davey to announce the review.There remain several barriers to change in each of these areas due to current European law, which is perhaps why the Government has stated that legislation “will not necessarily be the route to implement any change if there is a case for reform”. For example, compensation in discrimination cases was capped at £11,000 in the United Kingdom until the mid-nineties. However, caps were removed following the European Court of Justice (“ECJ”) decision in Marshall v Southampton and South-West Hampshire Area Health Authority (No.2) [1993] IRLR 445.

    The announcement on 11 May 2011 was swiftly followed on 16 May 2011 by the launch of a new consultation document by BIS entitled ‘Consultation on Modern Workplaces’, which makes proposals in the following areas:

  • Flexible parental leave. 18 weeks’ maternity leave to be retained for mothers, with the remaining maternity leave to be reclassified as “parental leave”, the majority of which will be paid, and which will be allowed to be taken by either the mother or father, or to be shared between the two. The consultation will also cover allowing employers and employees to agree for parental leave to be taken in chunks, or on a part-time basis.
  • Flexible working. The right to request flexible working to be extended to all employees, not just those with children under 17 (or 18 for parents of disabled children).
  • Working Time Regulations 1998 (“WTR”). The WTR to be amended to enshrine ECJ case law, namely providing that employees can carry over untaken holiday into subsequent years if they have lost the chance to take paid holiday because of sickness absence or maternity/parental leave. The proposal is to limit the amount of holiday lost due to sickness absence that may be carried over to the four weeks’ compulsory paid leave under the Working Time Directive (i.e. the employee would lose the extra 1.6 weeks’ they receive, above EU minimum requirements, under the WTR). The Government is also considering proposals to allow employers to “buy out” that extra 1.6 weeks.
  • Equal Pay. A duty to be introduced for Employment Tribunals to require employers to conduct a pay audit if they have been found guilty of breaching equal pay legislation, unless it is not productive to do so.Business Secretary Vince Cable said; “Our proposals will encourage greater choice by giving employees and their employers the flexibility to find arrangements to suit them both. New parents should be able to choose their childcare arrangements for themselves, rather than being dictated to by rigid Government regulation as is currently the case. Employers should be encouraged to come to agreement with employees on how work and family responsibilities can be met simultaneously.” The consultation shall remain open until 8 August 2011.

    It is evident from the Government’s recent announcements that employment law reform looks set to continue apace over the coming months. Employers can be sure to keep up with all the latest developments by staying tuned to The Tribunal!

    For more information on this or any other employment law matter please contact Helen Watson on 01244 405565 or email her here.

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