Legal Opinion: ‘Employers’ charter’ or political double-speak?

Reading the reports over the last few weeks that trail the coalition Government’s plans for employment law reform, it’s tempting to feel sorry for Andy Coulson, the embattled former editor of the News of the World, currently communications director for No. 10. As if he didn’t have enough on his plate, he must have been burning the midnight oil to find a positive way of presenting the proposals. And just look at what he came up with.

Three headline concepts have been trailed so far: increasing the unfair dismissal qualifying period from one to two years; imposing fees for tribunal claims; and reducing the statutory sick pay period.

Increasing the unfair dismissal qualifying period from one to two years

According to a “Whitehall source” quoted by the Telegraph, increasing the unfair dismissal qualifying period is going to empower businesses to “sack the slackers!”

Employers currently have 51 weeks to decide whether somebody is a slacker or not before they accrue unfair dismissal rights. Seemingly, the Government thinks that employers are avoiding recruiting staff because of this. Apparently, if employers are given 103 weeks before staff gain these rights, they’ll recruit more people.

The idea might be to cut the number of unfair dismissal claims and thereby relieve the pressure on over-burdened tribunals and cut costs (a laudable aim). But the bulk of the “vexatious” claims tribunals deal with are discrimination and whistleblowing claims made tactically in order to argue for compensation in the first year of employment, or to argue for higher settlements than could be achieved for unfair dismissal, for which compensation is limited. These claims are more complicated and more expensive than unfair dismissal claims. Reducing unfair dismissal rights could prompt more costly and vexatious claims and thereby undermine the Government’s goal.

This idea is easy to implement as it doesn’t require legislation. It has symbolic value for voters who object on principle to regulation of the labour markets and reverts to the pre-New Labour provisions, making a little bit of New Labour ancient history. Is this what’s really going on?

Imposing fees for tribunal claims

Imposing fees for tribunal claims will, we are told, discourage vexatious litigants.

The deterrent effect will apply to all litigants, not just vexatious ones. Fees also undermine the ethos of the tribunal system, which is meant to give easy access to unsophisticated claimants who feel aggrieved.

Perhaps, again, the true motive in this age of austerity is to cut costs by deterring large numbers of potential litigants from making claims. This might well work and, again, the goal is reasonable. But serious questions arise as to access to justice, and because of the way these reforms are being presented, there is no discussion about this.

Lastly, of course, it could again be a symbolic gesture for voters who feel that workers’ rights have got out of hand in the last 10 years.

Reducing the statutory sick pay period

Reducing the statutory sick pay (SSP) period will apparently reduce the financial burden on employers and encourage increased recruitment.

SSP is payable on the 4th day of sickness absence at a current rate of £79.15 per week for up to 28 weeks. In some circumstances, employers can reclaim SSP via the national insurance regime. A miniscule proportion of the labour force ever uses its full entitlement, so if the period of payment is reduced this will impact on a tiny number of staff, most of whom will be quite seriously ill. Seemingly, the Government thinks that saving a few employers a few hundred pounds is going to improve employer sentiment generally, so lots of employers will gamble on recruitment.

Once again, it’s tempting to conclude that this is about saving money by reducing the SSP bill to government. If so, it’s going to save very little.

If it’s a sop to voters who object to regulation and employee rights on principle, will those voters be impressed by this particular move? And will voters more generally support a move targeted at workers living on £79.15 per week while coping with sickness?

Whatever’s going on, Peter Mandelson must grudgingly admire this exhibition of the dark arts of spin!

Richard Miskella, partner, employment and incentives department, Lewis Silkin LLP

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