Workplace dispute reforms proposed by Government
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Issued on 27 January
2011 - BIS
The Government has today
announced the next steps in its comprehensive review of employment
New plans to improve
the way in which workplace disputes are resolved have been published
alongside an “Employer’s Charter” – the measures are designed to give
businesses more confidence to take on workers and support growth.
Tribunal claims rose
to 236,000 last year – a record figure and a rise of 56 per cent on
2009 – and business has to spend almost £4,000 on average to defend
itself against a claim. Concerns have been raised by businesses that
the system has become too costly, takes too much time, places
unnecessary strains on small businesses and that it is too easy to make
unmerited or vexatious claims.
Prime Minister David
"A critical element of
the Government's growth strategy is to create the conditions which
allow businesses, especially smaller businesses, to flourish and
expand, by reducing regulation and maintaining a flexible and dynamic
on reforms to employment law are among the first conclusions of our
government-wide growth review, and highlight our determination to
ensure that employment law is no longer seen as a barrier to growth,
while making sure that employees and employers are treated fairly.
“Giving businesses the
confidence to take on somebody new will be a real boost to the economy,
and help generate the sustainable growth we need."
Vince Cable said:
“Disputes in the
workplace cost time and money, can affect morale, reduce productivity
and hold back businesses. We often hear that knife-edge decisions about
whether to hire new staff can be swung by concerns about ending up in
an employment tribunal if things don’t work out. Today’s proposals
address these concerns and should help give employers more confidence.”
“But let’s be clear –
resolving disputes earlier is also in the interests of workers. No one
wants to spend month after month worrying about a claim – we need to
make what can be an extremely stressful time in people’s lives as short
“In the business world
there is also a common misconception that employment protections are
all one-way - towards the employee. The Charter we are publishing today
tackles this myth by setting out clearly some of the most important
rights that employers already have in the workplace.”
The Government wants
to enable workplace disputes to be resolved as early and as easily as
possible. The key proposals set out in a consultation published today
- Giving businesses greater confidence to hire new
staff by increasing the qualifying period for employees to be able to
bring a claim for unfair dismissal from one to two years -
this will also ultimately reduce the number of disputes that go to
- Encouraging parties to resolve disputes between
themselves as early as possible – requiring all claims to be
lodged with Acas (Advisory, Conciliation and Arbitration Service) in
the first instance to allow pre-claim conciliation to be offered. This
also includes introducing settlement offers to encourage parties to
make reasonable offers of settlement to avoid Tribunal hearings and
encouraging parties to consider other forms of early dispute resolution
such as mediation;
- Speeding up the tribunal process – extending
the jurisdictions where judges would sit alone to
include unfair dismissal, introducing the use of legal officers to deal
with certain case management functions and taking witness statements as
read. This will result in Employment Tribunal resources being used more
efficiently and allow cases to be listed and heard more quickly, saving
time and cost; and
- Tackling weak and vexatious claims – providing
the Employment Tribunals with a range of more flexible case management
powers so that weaker cases can be dealt with in a way that does not
mean disproportionate costs for employers.
There is also a
commitment for the Ministry of Justice to consult separately on
introducing fees for Employment Tribunal cases and appeals, to ensure
that users contribute towards the cost of running the system.
Kenneth Clarke said:
"It's in everyone's
interests - employers, employees and taxpayers - to have a dispute
resolution system that is efficient, simple to use and supports the
"We have heard clear
calls from users for reform to the Employment Tribunal system,
particularly the need to ensure robust powers and procedures are in
place to deal with claims more efficiently, more effectively and -
importantly - more proportionately.
"So I will be working
closely with colleagues across Government to get this package of
proposals implemented as quickly as possible, and I will also be
consulting separately later in the year on the detail of introducing
fees for Employment Tribunal cases, to ensure that people who use the
system contribute towards its cost."
document also includes proposals to:
- Increase the provision of information –
aimed at reducing speculative claims, this would require more
information on the nature of the claim being made and to include a
statement of loss. It will help parties to decide whether to agree a
settlement offer or proceed to a Tribunal hearing;
- Withdraw the payment of expenses - encouraging
parties to either settle earlier or reduce the number of witnesses they
- Introduce financial penalties for employers found
to have breached rights – aimed at encouraging greater
compliance from employers and thus a reduction in the number of
The intention of the Charter
is to raise awareness and give clarity amongst employers on what they
can and can’t do when managing their staff and covers a wide range of
employment law issues.
The employment law
review is taking a comprehensive look at employment legislation across
government. In the next few months, we will consider the requirements
on employers when they take on staff to ensure that it is as simple and
straightforward as possible. As part of this, we intend to publish a
model contract for employers shortly.
- The joint BIS and Tribunals Service consultation document
can be found here -
and will run from the 27 January to 20 April 2011.
- The Employer’s Charter can be found here -
- The Ministry of Justice propose to consult on how best to
implement a fees mechanism in the spring of 2011.
- Currently only a small number of workplace disputes result
in a potential claim contact via Acas. Of those that are referred into
pre-claim conciliation (PCC), less than 30% go on to become Tribunal
claims. Effectively extending PCC to all potential claimants could
offer significant savings to employers through early resolution, and by
identifying speculative, weak and vexatious claims.
- Under proposals in the consultation a judge will be able to
issue a deposit order at any stage of the proceedings and will make the
deposit order test more flexible.
- Formalising offers to settle will develop a process for
allowing offers of settlement to be lodged with the Employment Tribunal
if they are rejected by the party. In the event that the Employment
Tribunal subsequently makes a less favourable award, then there is a
mechanism for recognising the additional costs incurred by the other
party in proceeding to hearing. This is similar to the system that
operates in the civil courts (under part 36 of the Civil Procedural
Rules), but the differences in the way Employment Tribunals operate
present some challenges, including attaching a financial value to the
non-financial elements of a remedy (such as an apology or a reference).
- Initial estimates show that increasing qualification
periods for unfair dismissal from one to two years would result in
3,700 to 4,700 fewer Employment Tribunal cases per year. The proposal
would not affect the so-called "day one" rights against unfair
dismissal, such as on grounds of discrimination.
- BIS has estimated that employers face average costs of
£3,800 per case with an average additional cost to the taxpayer of
- Alongside other proposed changes to the Employment Tribunal
system, the Government is also taking the opportunity to consider some
changes to the way in which certain Employment Tribunal awards and
other payments under employment rights legislation are revised each
year. Included in the consultation are proposals for witness statements
will also be taken as read.
- Upon taking office, the Government started a fundamental
review of employment law so that it properly balances the needs of
employers and employees, and provides the competitive environment
required for businesses to thrive.
- A key part of the Government’s growth strategy is to create
the right conditions that allow businesses, particularly small and
medium enterprises, to grow and expand by reducing regulation and
maintaining a flexible and dynamic labour market. The Growth Review
will report by Budget 2011 http://www.bis.gov.uk/growth.
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 2011-01-28 12:14:33 in Employee Articles