New Workforce Flexibility From A Tougher Cable?
New Workforce Flexibility From A Tougher Cable?
New steps to give firms more flexibility and confidence in managing their workforce and to reduce employment law red tape, were announced today by Business Secretary Vince Cable. They are most likely to benefit small businesses.
Today’s package comes in response to calls from business to simplify and speed up the process of ending the employment relationship when it breaks down, for the benefit of both employers and employees.
The Government has given details of:
its support for settlement agreements to help end employment relationships in a fair and consensual way. A consultation on how best to make this work in practice starts today and Acas has agreed to provide a new code of practice how it might reduce the cap on compensation for unfair dismissal claims proposals to streamline employment tribunals by making it easier for judges to dismiss weak cases responses to its call for evidence on the TUPE rules, when staff transfer to a new employer. Government has heard that businesses want this to be more efficient, and will consult on specific proposals before the end of the year, and recommendations on how to improve guidance for small businesses on the Acas code of practice on discipline and grievance.
The Government also responded formally to the call for evidence on proposals for compensated no fault dismissal for micro-firms. Based on the evidence presented by business the Government will not be taking forward the proposal.
The UK has a lightly regulated, flexible labour market that the OECD considers to be amongst the best in the world, behind only USA and Canada. The recent World Economic Forum Global Competitiveness Report cited the flexibility of the UK’s labour market as one of the main reasons for its improvement in the global rankings to 8th from 10th.
But the Government has committed to look at ways to make it more responsive to businesses through a parliament long review of employment law, in conjunction with the Red Tape Challenge on employment law, with the aim of clearing away unnecessary and complex regulation that has damaged flexibility, created perverse incentives, increased business risk and unnecessary administration.
Business Secretary Vince Cable said: "We have been looking across the range of employment laws with a view to making it easier for firms to hire staff while protecting basic labour rights.
“Our starting point is that Britain already has very flexible labour markets. That is why well over one million new private sector jobs have been created in the last two years, even when the economy has been flatlining.
“But we acknowledge that more can be done to help small companies by reducing the burden of employment tribunals, which we are reforming, and moving to less confrontational dispute resolutions through settlement agreements."
The Government is already delivering significant reforms of employment law, including extending the period for eligibility for unfair dismissal from one to two years, encouraging more effective ways to resolve disputes and thereby reduce the number of employment tribunals, creating a universally portable Criminal Records Bureau (CRB) check and removing the default retirement age. The Government has considered, or is already taking forward, 80 per cent of proposals from Adrian Beecroft’s report on employment law, published earlier this year.
Katja Hall, CBI Chief Policy Director, said: “Businesses want to see progress on key areas of employment law reform. The Government has identified the right issues to address – unclogging time-consuming employment tribunals, encouraging early fair settlement of disputes and reform to TUPE and redundancy rules that heap red tape onto business.
“As in other areas of government policy, what really matters now is taking action to deliver real change on the ground. Firms will judge the Government’s performance on how quickly and effectively these changes start to have a positive impact on their businesses, not the state of the debate in Whitehall.”
COMMENT ON CABLES MEASURES
Alistair Cox, Chief Executive at Hays, responds to Cable’s proposals regarding dismissal outlined on 14th September 2012:
“The package of measures announced today is a small step to reduce the & lsquo;fear factor’ for employers when considering taking on new staff. Historically, much of the employment legislation has been weighted in favour of the employee and in today’s challenging environment we need to be doing all we can to support businesses and put growth firmly at the top of everybody’s agenda.
The employers we deal with still feel employment legislation is a burden. These measures don’t go far enough to address this, but the introduction of the voluntary settlement agreements will be particularly pertinent in the case of senior professionals, when both parties understand that the working relationship has become ineffective and unsustainable.
We would like to see more positive action from the government to support businesses so they have the confidence to grow and create new jobs.”
BCC: Employment law changes will help create flexible labour market
Commenting on the proposals announced by Vince Cable on the proposed employment law changes, Dr Adam Marshall, Director of Policy at the British Chambers of Commerce (BCC), said: “Employers will be encouraged that the government is taking steps to reduce the burden of the employment system and create a more flexible labour market. Dismissal is always a last resort, but is at times necessary to protect a business and other members of staff. The fear of malicious tribunal claims and an unnecessarily antagonistic dismissal process has a chilling effect on employment. We would urge the government to move swiftly from consultation to implementation on settlement agreements and lower tribunal awards, as these proposals will boost confidence when businesses on the ground can see them in action.
On settlement agreements: “In those unfortunate circumstances when businesses have to end the employment relationship, settlement agreements provide a speedy and consensual way to avoid disputes. Companies need to be confident that they can offer an employee a settlement to end the relationship without fear of future claims. We support moves by the government to make the process of offering a settlement easier to navigate without paying for specialist advice.”
On limiting tribunal awards: “The current maximum award for unfair dismissal vastly exceeds the reality of most cases, but prevents many employers from seeking justice, and puts many more off hiring all together. The upper limit should be reduced and this would significantly increase employers’ confidence to challenge unmeritorious claims and recruit more staff.”
On tribunal reforms: “These measures form part of a broader government agenda to reform the tribunal system and ensure it becomes less of a barrier to employment and economic prosperity. Although employers have welcomed efforts to deter vexatious claims by introducing fees for claimants, that policy will be undermined if the system of remissions means that just a quarter have to pay the full fee. The government must get a grip and ensure that all those who can afford the fee are made to pay.”
On additional changes needed to boost employment and confidence: “These measures will boost employers’ confidence and lead them to create additional jobs, but will be undermined by upcoming government proposals on extending the right to request flexible working and shared parental leave. Extending the right to request to all workers will make it more difficult for employers to accommodate requests from those with caring duties. Similarly while we support the objective of helping mothers who want to return to work to do so, we are yet to see proposals on flexible parental leave that are workable.”