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Next steps in review of employment law


BIS Department for Business Innovation and Skills - Expert Author

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Issued on 11 May 2011

The Government has today announced new areas that it will consider reforming as part of its review of employment red tape – including collective redundancy consultation periods, the Transfer Undertakings Protection of Employment Regulations (TUPE) and compensation for discrimination awarded by employment tribunals.

The ongoing review is an important part of the Government's plans to deliver growth by breaking down barriers, boosting opportunities and creating the right conditions for businesses to start up and thrive.

The Chancellor of the Exchequer, George Osborne, will encourage businesses to make their voices heard on the issues which matter to them, including employment law, in his speech to the Institute of Directors Annual Convention.

The Chancellor said:

“If we are to support private sector growth and create jobs, we can’t shy away from looking at difficult issues like employment law. Examining these areas of the law which could be holding back job creation demonstrates the Government’s commitment to go for growth.”

Employment Relations Minister Edward Davey detailed the plans during a speech at the Institute of Economic Affairs.

Edward Davey said:

“The areas we are reviewing are priorities for employers. We want to make it easier for businesses to take on staff and grow.

“We will be looking carefully at the arguments for reform. Fairness for individuals will not be compromised – but where we can make legislation easier to understand, improve efficiency and reduce unnecessary bureaucracy we will.”

The Government will look in detail at the case for reforming:

  • Compensation for discrimination. There need to be remedies for discrimination, but employers have expressed concern about the high levels of compensation sometimes awarded by Employment Tribunals in cases of discrimination - and the lack of certainty they have about the level of award they may be required to pay. Compensation levels for cases of discrimination are unlimited and employers worry that high awards may encourage people to take weak, speculative or vexatious cases in the hope of a large payout. This can lead to employers settling such cases before they reach a Tribunal.
  • Collective redundancy rules. Employers are concerned that the current requirement that consultation over collective redundancy runs for a minimum period of 90 days is hindering their ability to restructure efficiently and retain a flexible workforce. Employers in financial difficulty worry about how long they need to keep paying staff after it has become clear that they need to let them go. They also claim it is not clear from the legislation at what point consultation on redundancies should start or end.
  • TUPE. These rules implement a European directive and protect employees’ terms and conditions of employment when a business is transferred from one owner to another. These rules offer important protections but some businesses believe that they are `gold plated’ and overly bureaucratic.

The Government will start reviewing these areas this year. It wants to ensure that the regulations are fit for purpose, and legislation will not necessarily be the route to implement any change if there is a case for reform.

As part of the review of employment law consultations have recently closed on simplifying the Employment Tribunal system and extending the period before an unfair dismissal claim can be brought. An independent review of the system for managing sickness absence has been commissioned and a review of the compliance and enforcement regimes for employment law has been launched.

The Government believes that a flexible labour market is not simply about making life easy for employers. It is also determined to help people who want to work. Next week it will launch a consultation on plans to extend the right to request flexible working to all employees and introduce a new system of shared parental leave from 2015 – to make it easier for parents to work whilst bringing up a family.


1. Since the Employment Law Review was announced last summer the Government has:

  • Consulted on a package of reforms to the employment tribunal system, aimed at encouraging earlier resolution of disputes in the workplace and reducing the number of tribunal cases (which are costly for employers, employees and Government)
  • launched an Employer’s Charter that reassures employers about what they can already do to deal with staff issues in the workplace
  • launched a review of the compliance and enforcement regimes for employment law, with the aim of streamlining the system
  • removed the Default Retirement Age, thus removing significant paperwork obligations for employers and bringing wider benefits to the economy, making it easier for older people to continue working
  • announced the proposed abolition of the Agricultural Wages Board and Agricultural Minimum Wage, pending consultation and the Parliamentary process
  • commissioned an independent review jointly with DWP (from David Frost and Dame Carol Black) of the system for managing sickness absence
  • repealed the planned extension of the right to request flexible working to parents of 17 year olds
  • decided not to bring forward the dual discrimination provision in the Equality Act
  • not extended the right to request time to train to companies with fewer than 250 staff.

2. The Government will also look for ways to simplify the burden of paperwork, particularly in the areas of flexible working and parental leave.

3. The Government is committed to stopping the deluge of regulation that is restricting businesses and wants to be the first Government in history to reduce the burden of regulation over its lifetime. It has already set up a robust challenge process to ensure that new regulation is a last resort and is currently running the Red Tape Challenge campaign ( which asks the public for their views on all 21,000 regulations on the statute book.

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Article Published/Sorted/Amended on Scopulus 2011-05-12 12:35:02 in Legal Articles

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