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The CBI has today (Thursday) commented on changes to workplace dispute settlements and TUPE regulations, announced by Employment Relations Minister Jo Swinson.

The measures include:

- a 12 month pay cap on the compensatory award for unfair dismissal to give employers more certainty about their potential liability. There were 46,300 unfair dismissal claims in 2011/12 and the average award is &pound5,000. The average UK salary is &pound26,500

- consult on how the proposed Early Conciliation (EC) will operate in practice to encourage the use of settlement agreements to avoid the costs and stresses of a tribunal case and

- consult on proposals to reduce Transfer of Undertakings (Protection of Employment) or TUPE burdens on business - protecting fairness to employee when they transfer to a new employer.

On capping unfair dismissal awards and early settlement of disputes

Neil Carberry, CBI Director of Employment and Skills said:

“Delays in the current tribunal system are the single biggest confidence killer for firms wanting to grow. No one wants disputes to end in tribunals, particularly small businesses, so the system needs to promote early settlement more actively.

“The current cap on unfair dismissal payouts is many times higher than the average sums awarded, giving workers unrealistic and inflated expectations of what a claim is worth. It’s right that the new cap is linked more explicitly to an employee’s earnings. This will give businesses clarity about the potential costs and will scrap the perverse incentive for workers not to settle in the hope of getting a higher award.

“Support from ACAS to settle disputes before the legal process takes over is the right thing to do. Encouraging this gives both businesses and employees a clear nudge to settle early and avoid cost and time on both sides.”

On TUPE reform

Mr Carberry said:

“It’s right that workers should be protected when they transfer to a new employer but the current rules are needlessly prescriptive, unclear and go far beyond EU requirements. We’ve long argued for a radical simplification to avoid situations where staff do the same job but have completely different pay, leave, working hours and pensions. Such complexity dampens business innovation and growth,  which we can ill afford when the economy is struggling.”

Commenting on the same issue the BCC said.

BCC: Devil’s in the detail, but proposed employment law changes should boost employer confidence

Commenting on today’s announcements on the Employment Law Review, published today by the Department for Business, Innovation and Skills, Dr Adam Marshall, Director of Policy and External Affairs at the British Chambers of Commerce (BCC) said:

"Employers invest a lot of time and resource in recruiting and training the right members of staff. Ending the employment relationship is always a last resort, but is sometimes necessary. As always, the devil is in the detail, but these proposed measures are fair and should reduce stress, uncertainty, and delay for both employee and employer.”

On the proposed cap on awards for unfair dismissal:

“The average compensation awarded for unfair dismissal is less than &pound6,000, but the maximum award of &pound72,300 often creates unrealistic expectations, making claimants less likely to settle, and employers less willing to risk defending themselves. The proposed cap will make employers more confident in recruiting and also in defending themselves, if accused of ending employment unfairly. However, given how few people earn &pound72,300, we question the merits of maintaining this damaging headline figure.”

On the consultation of the new ACAS Statutory Code for settlement agreements:

“Settlement agreements offer a consensual and dignified way for both parties to end the employment relationship, avoiding the stress, uncertainty and delay of a tribunal, and allowing all parties to return their focus to work. The proposed legislation will prevent settlement offers being used in future tribunal proceedings, giving employers confidence and security to make an offer to the benefit of both business and employee. The Statutory Code must offer employers flexibility, and be designed to smooth the process, not to trip them up.”

On the consultation into early conciliation:

“Making early conciliation through ACAS compulsory for all claimants is just common sense. Where the parties are unable to agree, they can go to tribunal, but this should always be a last resort, and in many cases professional mediation will avoid this unpleasant and costly outcome.”

On the consultation on proposed changes to TUPE:

“TUPE legislation too often prevents failing companies from being successfully restructured. We welcome the government’s intention to remove its burdensome & lsquo;gold-plating’ of the Acquired Rights Directive. This should go some way to enable companies to be turned around, which will help businesses to focus on saving viable jobs, and make it easier for employers to consult those affected.”


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