Government announces radical overhaul of employment legislation

The Government has announced a radical overhaul of employment legislation today, including the introduction of a right for employers to have "protected conversations" with employees about performance without it being used in tribunal claims and a consultation on plans to ban unfair dismissal claims for staff at micro-firms.

According to the new proposals, staff who work for firms with 10 or fewer employees could be barred from claiming unfair dismissal. The move, on which the Government is seeking views, is intended to simplify the firing process and reduce the number of claims going to employment tribunal. Instead of going to a tribunal, employers could instead pay sacked staff compensation.

The Government is also announced plans to allow employers to hold "protected conversations" with staff about poor performance without them being used in future job tribunal claims and proposed to review the consultation period for planned redundancies. It currently stands at 90 days and the Government wants to reduce this to 30 days.

Also included is a proposal to require all claims be put before the conciliation service Acas instead of going straight to employment tribunal and a "rapid resolution scheme" under which simple cases could be settled within three months.

The Government says this will cut red tape that is holding back businesses, but the unions fear it could make it harder for employees to bring claims for unfair dismissal.

TUC General Secretary Brendan Barber said: "Reducing protection for people at work will not save or create a single job. It's not employment law that is holding firms back, it's the tough economic climate and the problems many companies are having getting the banks to lend to them that's to blame. Research from the OECD shows that there is no link between regulation and economic output - German employees have much more protection at work and their economy is the strongest in Europe.

"At a time when thousands of jobs are under threat as a result of the government's austerity programme, reducing the time that organisations have to consult with their employees whose jobs are at risk of redundancy flies in the face of good sense. The move will have little impact on the company, but it will make a huge difference to staff worried about their futures, increasing their stress at what can be a hugely traumatic time.

"Although unions will welcome any moves to improve the chances of disputes being resolved within the workplace, the idea that every year employment tribunals are presented with lots of trivial claims is nonsense. Tribunals already have solid procedures for rooting out weak claims.

"Allowing conversations that happen at work over difficult issues like retirement or poor performance to take place, but not permitting their record to be referred to in the future, should a case ever go to tribunal, is hugely worrying. This could simply provide the perfect cover for rogue bosses to bully at whim without fear of ever being found out."

Complications
Ben Willmott, Head of Public Policy at the Chartered Institute of Personnel and Development, said: "Genuine proposals to simplify employment law and reform the employment tribunal system are welcome - but where it comes to 'protected conversations' the Government needs to beware the spectre of unintended consequences.

"Plans to ensure that all claims go to Acas to be offered conciliation before going to an employment tribunal are sensible and will help reduce claimant numbers, as will plans to simplify the use of compromise agreements and to encourage greater use of mediation.

"However, proposals to introduce some form of 'protected conversation' to allow employers to discuss issues like retirement and poor performance without fear of a tribunal claim, while well meant, are likely to actually increase confusion among employers, add to red tape and generate additional legal disputes. By offering false comfort, the Government risks creating a field day for employment lawyers and a nightmare for businesses.

"In the same way, the increase in the unfair dismissal qualification period from one year to two years is a poor policy call. There is no evidence that it will have any significant impact on reducing the number of employment tribunal claims or support the labour market in anyway. Both these measures risk making excuses for poor managers - who will cost firms far more in the form of demotivated, unproductive workers than they will in tribunals.

"Failings in management and leadership that hit UK productivity and leave us lagging our international competitors are a far greater brake on growth than UK employment law, and the legally fraught idea of creating notionally 'protected' conversations and increasing to two years the period in which employees are not covered by unfair dismissal law, risk making a bad problem worse."