During a speech to EEF, the manufacturers organisation, Dr Cable announced the results of a consultation on resolving workplace disputes and the Red Tape Challenge review of employment law.
A package of measures will retain key protections for employees, but also fundamentally improve the way employers take people on, manage disputes and let people go. Changes will include an overhaul of employment tribunals, which is expected to deliver £40 million a year in benefits to employers. Ministers will also start a call for evidence on whether the 90 day minimum consultation period for collective redundancies is restricting businesses and should be reduced.
Vince Cable said: “Our labour market is already one of the most flexible in the world. This flexibility benefits businesses, staff and the wider economy. But many employers still feel that employment law is a barrier to growing their business.
“We’re knocking down that barrier today – getting the state out of the way, making it easier for businesses to take on staff and improving the process for when staff have to be let go.
“But let me be clear: we are not re-balancing employment law simply in the direction of employers. Our proposals strike an appropriate balance and we are keeping the necessary protections already in place to protect employees. Our proposals are not – emphatically not – an attempt to give businesses an easy ride at the expense of their staff. Nor have we made a cynical choice to favour flexibility over fairness.
“We know that disputes at work cost time and money, reduce productivity and can distract employers from the day-to-day running of their business. Tribunals should be a last resort for workplace problems which is why we want disputes to be solved in other ways.”
In response to the suggestion that dismissal laws are too onerous for small businesses in particular, the Government will launch a call for evidence on two proposals.
Firstly it will seek views on a proposal to introduce compensated no fault dismissal for micro firms, with fewer than 10 employees. Secondly, it will look at ways to slim down existing dismissal processes, how they might be simplified, including potentially working with the Advisory, Conciliation and Arbitration Service (Acas) to make changes to their Code, or supplementary guidance for small businesses.
Simplifying the employment tribunals system for businesses will result in fewer claims each year. These reforms will deliver direct net savings to business of more than £10 million a year with wider benefits to employers estimated at more than £40 million a year.
Proposals resulting from the Red Tape Challenge include a call for evidence on the consultation rules for collective redundancies and whether the current 90 day minimum period for more than 100 redundancies can be reduced. Ministers are keen to see what impact this has on the restructuring of businesses, whether this acts as a barrier to employer flexibility in the labour market and how any change might affect employees’ access to alternative employment or training.
The Ministry of Justice will shortly publish a consultation on the introduction of fees for anyone wishing to take a claim to an employment tribunal. The proposals will transfer the cost burden from taxpayers to users of the system and encourage claimants to consider seriously the validity of their claim. The consultation will seek views on two options. The first proposes a system that involves payment of an initial fee to lodge a claim, and a second fee to take that claim to hearing. The second option proposes introducing a £30,000 threshold, so those seeking an award above this level will pay more to bring a claim.
Speaking about the announcement, Kirsty Burgess, co-founder of HR consultancy Reabur.com said: “For once it looks like Vince has got his cables wired up properly. We have frequently highlighted that the tribunal system is creaking under the tidal wave of vexatious claims made by employees who mercilessly “game” employment law for their own gain. Employers across the UK will be delighted with the proposals outlined today.”
Dan Watkins, Director of find-a-solicitor service, Contact Law, said: “The government has long worn its pro-business colours on its sleeve, and behind these reforms lies its conviction that the current employment tribunal system is overly stacked against employers.
“The current system wastes a lot of resources, both in money and time. We welcome the attempts to encourage the use of mediation and compromise agreements, to reduce the time taken to reach a conclusion in an employment dispute, and to reduce the financial costs for both employers and employees too.