Employment tribunal shake up will help business growth
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04 April 2012 - BIS
Employment tribunal changes
will come into effect on Friday that will make it easier for businesses
to take on staff and improve the process when staff have to be let go.
These changes are part of a radical reform package that will
ultimately deliver direct net savings to business of more than £10
million a year with wider benefits to employers estimated at more than
£40 million a year.
The Government has streamlined employment tribunals to cut
unnecessary demands on employers, and encourage growth, while
safeguarding workers’ rights. From 6 April:
- The qualifying period for
claiming unfair dismissal will rise from one to two years
- Judges will be able to
sit alone in unfair dismissal cases
- Witness statements can be
provided in writing as opposed to the current rules where a witness
reads their own statement out aloud
- The maximum level for
costs awarded to businesses winning a vexatious tribunal claim will
rise from £10,000 to £20,000. Deposit orders required by claimants when
a judge determines that a part of claim is unmerited will increase from
£500 to £1,000.
Also from Friday, we will publish the average value of awards
and time taken to reach a hearing. Included in the guidance for
tribunal application and response forms, this information will provide
all parties with a greater understanding about what to expect from the
tribunal process before they enter the system.
Business Secretary Vince Cable said:
“For too long now the system in place for employment tribunals has been
a bloated and bureaucratic obstacle for employers and the taxpayer. For
employers they were finding that weak and vexatious cases were too much
of the norm, too easy to bring forward, while for the taxpayer they
were proving ever more expensive to run.
“We have seen claims drop in the last year and we want to see this
continue as we introduce alternative measures in the coming months
helping both parties resolve workplace disputes.”
The improvements to the tribunals system follow a steady stream of
announcements and initiatives to reduce the burden of regulation on
The Budget on 20 March included commitments to scrap or improve 84 per
cent of health and safety regulation; as well as introducing
sector-based reviews to ensure that regulations are enforced in a way
that results in the lowest possible cost to business.
The One-in, One-out rule – the first of its kind anywhere in the world
– has begun to turn back the tide since it took effect in January 2011.
Any minister who wants to introduce a new rule which generates costs
for business must first identify a corresponding cut in regulation
elsewhere with the same value.
On 28 February the Third Statement of New Regulation, which measures
the success of the One-in, One-out rule, was published showing that
around £4 million of regulatory burdens will be cut from British
businesses between January and June 2012. It also demonstrated that
there has been cumulative net reduction of regulation since January
Business and Enterprise Minister Mark Prisk said:
“The One-in, One-out process is one of the best tools we have to cut
the costs and burden of regulation on our businesses. But we know that
changing the culture of regulation in Whitehall is a long-term job, and
all of us in Government have to, and will, continue to root out red
tape which poses more of a hindrance than a help to UK businesses.”
Notes to editor
- Most new laws affecting businesses come into force on one
of two common commencement dates (CCDs) each year - 6 April and 1
October. CCDs enable business to prepare for the introduction of new,
amended or reduced requirements. Read more about CCDs and the changes
due to be introduced here: http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1075320304&type=ONEOFFPAGE
- There were 218,000 tribunal claims in 2010-11, a rise of
44% since 2008-09, with each business spending nearly £4,000 per claim
on average defending itself. There is an additional average cost of a
£1,900 to the taxpayer per claim.
- Previously, Employment Judges were required to sit with lay
members in all unfair dismissal employment tribunal cases. Friday’s
change means that such cases will automatically be heard by a judge
sitting alone unless they consider that it is appropriate for the case
to be heard by a full panel, for example, where there are significant
disputes as to the facts of a case. In most other civil cases judges
sit alone to determine complex and extremely sensitive factual issues.
- Under the previous rules, witnesses were generally required
to read out the statement they had prepared to the court. Having them
taken as read will help to increase the efficiency of the tribunal
process; hearing times will be reduced and more claims can be heard.
- BIS is currently running the ‘Focus on Enforcement’
campaign which is asking business to tell us where enforcement can be
improved, reduced or done differently and to discover and celebrate
where it works well, so others can learn from it. The first three
reviews were announced at Budget and will cover chemicals, small
businesses in food manufacturing and volunteer events. More information
is available at: http://discuss.bis.gov.uk/focusonenforcement
- One-in, One-Out (OIOO) means that any new Whitehall
regulation that imposes a net cost to business must be offset by a
reduction in regulatory costs elsewhere. The Third Statement of New
Regulation, which measures the success of OIOO, can be found here: http://www.bis.gov.uk/policies/bre/better-regulation-framework/one-in-one-out/statement
About the Author
© Crown Copyright. Material taken from the BIS Department for Business, Innovation and Skills. Reproduced under the terms and conditions of the Click-Use Licence.
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Article Published/Sorted/Amended on Scopulus 2012-04-05 11:26:05 in Legal Articles