Scope of employment legislation to extend?

Leaked reports of workplace laws shake-up refer to staff being able to claim
greater compensation and claim it sooner

According to details of a proposed consultation paper leaked to The Times
earlier this week, the Government looks set to significantly increase the scope
of primary employment legislation later this year. This is despite the fact
that some of the legislation being reviewed has been in force for less than
three years.

The DTI has stated that details reported by The Times cannot be seen as
definitive, but reports seem to suggest proposed changes will include the
removal of the requirement for employees to have at least one year’s service
before they are entitled to claim unfair dismissal. The maximum limit for
unfair dismissal compensation, which currently stands at £52,600, will also be
increased.

Employment tribunals may be given increased powers to reinstate unfairly
dismissed employees. In addition, the threshold for application of the
statutory union recognition procedure (which currently only applies to employers
with 21 or more employees) will be lowered.

Lastly, the Government looks set to abolish the ‘zero hours’ contracts,
where an employer can call upon individuals to perform services at any time,
but which does not require them to pay those individuals when their services
are not required.

Obviously at this stage the proposals are unconfirmed and likely to be
amended in some way. If they do go ahead, rights for employees, both
individually and collectively, will be dramatically extended in the workplace.
And the significant burden of employment legislation already faced by employers
will be increased.

Predictably, trade unions have welcomed this news. Employers’
representatives on the other hand, have expressed serious concern – the CBI has
already branded the planned review as "totally inappropriate".

Likely effects of changes

It goes without saying that the proposed abolition of the requirement that
an employee must have at least one year’s service to claim unfair dismissal
will almost certainly prompt an increase in applications to employment
tribunals. However, many believe that, ultimately, the Government will yield to
pressure from employers’ organisations and leave a six-month qualifying period
in place at least. However, this will still be a cause for concern for
employers as tribunal applications have already increased significantly in
recent years and the lowering of the qualifying period will increase this
burden.

The proposed increase in the £52,600 cap on compensation for unfair
dismissal is unlikely to have an impact in the majority of cases. However,
depending upon the level by which the cap is increased, it may encourage more
high-earning employees to bring claims in employment tribunals. Currently, if
an employee’s claim for unfair dismissal is judged to be worth more than
£52,600, their only option is to pursue the excess through issuing separate
proceedings in the High Court, which is a far more complex and costly
procedure.

The proposed legislation should also be looked at in the light of the
statutory union recognition procedure. This has now been in place for some time
and has not, as yet, produced the plethora of demands for recognition predicted
on its implementation. Trade unions have been careful to focus their efforts
and limited resources on specific companies and sectors. However, the reduction
in the threshold may mean very small employers are faced with a surprise demand
from organised employees who gain union support.

If the proposed changes proceed, they will constitute major changes to some
of the principal elements of existing employment legislation. While employees’
organisations no doubt await confirmation of the proposed changes and start of
the consultation process with baited breath, it is likely employers view it, at
best, with resignation. So we suggest any views on the proposed changes be
passed to the DTI at the appropriate time.

By Sarah Keeble, a partner in the Olswang employment department

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