Employers will welcome the measures, which aim to cut costs related to employment disputes and to improve the effectiveness of the employment tribunal process. These include consideration of a “rapid resolution” scheme as a quicker and cheaper alternative to employment tribunals and the requirement that all employment disputes should go through ACAS conciliation at the pre-claim stage. Several other proposals represent a tidying up or clarification of the present system and are not controversial.
The unfair dismissal qualifying period is being increased to two years’ service – it was reduced from two to one year in 1999. Some believe that this will make it easier for employers to dismiss without the risk of a claim arising, but discrimination claims do not require qualifying service and commentators have suggested that those types of complaint will increase instead. There are, of course, many more groups with protected characteristics, such as sexual orientation and religious beliefs, than there were in 1999.
There has been much debate over the introduction of fees for lodging claims, and while this has attracted criticism from some quarters, it may deter true “nuisance” complaints, of which there are many. The prevailing view is that claimants with genuine complaints will not be put off by fees. Those concerned about access to justice should have their fears allayed as the proposal includes fee exemptions or reductions for claimants still out of work or with low incomes. Claimants are, of course, often out of work when the complaint is lodged.
The government is placing special emphasis on small businesses with these reforms. In particular, they will seek views on introducing the concept of “no fault” dismissals (to include compensation) for “micro firms” of fewer than ten employees. A further proposal is that employers should be able to have “protected conversations” with employees relating to workplace issues such as performance. The idea is that issues can be put on the table and addressed at an early stage, avoiding the need for escalation. Conversations that have discriminatory content, however, will not be protected. It remains to be seen quite how this proposal will be put into effect and lawyers remain sceptical about its real value.
Perhaps less welcome for employers is a proposal to introduce financial penalties for those who are found to have breached employment rights. The fine would be subject to an employment judge’s discretion and payable to the Exchequer.
Penal awards are not a fundamental part of the employment tribunal system at present so this is significant development. Their existence should, however, discourage those who try to disregard employment “red-tape”.
Taken together it seems unlikely that these ideas will have an impact on the practices of larger employers. They have well established and embedded HR practices and procedures, and managers who have been trained on how to use them. Even if smaller employers with no HR departments will make use of these ideas, they would do so with some caution. Exercising the “protected conversation” and the “no fault” dismissal regularly may create “hire and fire” reputation which could impact on their ability to attract and retain talent. Recruiting and retaining skilled staff is vital to the success of any business and the reputational damage from being perceived as a firm that dismisses staff on a whim could have serious consequences.
Many of these proposals still require consultation, meaning that it is not yet clear which specific changes will be made. What is clear is that the coalition is trying to reduce red-tape and bureaucracy, however it is very difficult to imagine that years of good HR practice and procedure developed with the objective of retaining and motivating a workforce will be abandoned by businesses large and small simply as a result of the proposed reforms. This is not a charter for bullying bosses.
• Joan Cradden is head of employment at Brodies