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Employment law changes afoot…

It has long been a priority of the coalition government to overhaul the employment tribunal system in a bid to improve efficiency, encourage early settlement and stimulate business confidence. Following the Enterprise and Regulatory Reform Bill (“the Bill”) being introduced into the Commons last month, the proposals for a mandatory conciliation procedure and a varying power in relation to statutory caps have emerged as the two proposals with the most potential to influence employment law in practice.

If a conciliatory scheme was introduced in line with the government’s current proposals, it would be distinct from the current role of ACAS which is to help willing parties reach settlement in relation to certain proceedings, by imposing a duty on parties to participate in pre-claim conciliation.

A new four stage procedure would require a party to send “prescribed information” to ACAS before lodging any claim. Only when an officer felt settlement was not possible would they issue a certificate to this effect, without which a party would be unable to proceed to lodge a claim. This would impose a much greater importance on negotiation and settlement which would benefit all parties, including employers, by helping to reduce excessive legal costs in defending claims at tribunal, as well as keeping employment relations issues confidential and out of the public domain.

Questions remain about the procedure’s apparent similarity to the recently repealed (and what were felt by many to be overly complex) statutory dispute resolution procedures. In addition the proposal raises serious concerns about the ability of ACAS to cope with a hugely increased workload which was raised in the Bill’s Second Reading on 11th June, where the question of using private or alternative mediation services was raised. Regardless of these concerns, it is clear that such a scheme would offer much-needed reassurances to employers wary of litigation.

As regards the proposal to allow the Secretary of State power to vary the statutory limit on compensatory awards in unfair dismissal proceedings, employers should be cautious. While the variation would be limited to one of three forms, there is also reference to the “description” of an employer being relevant to establishing a fixed amount payable. For employers this could mean that the sum they are liable for will depend on the number of individuals it employs. The implications being that larger employers may be deemed more able to pay larger sums than smaller ones and this could escalate the associated costs of defending claims.

The Bill also proposes changes in relation to compromise agreements which, under the proposals being considered, would be renamed ‘settlement agreements’. The government has said it plans to publish standard ‘settlement agreements’ to be used by both employers and employees but the proposal of note for employers is in relation to what are being termed ‘protected conversations’.

These will allow employers to put forward a termination package or to discuss terminating the employment relationship with the security that the discussions cannot be raised in a subsequent employment tribunal claim. This proposal provides additional protection beyond the existing ‘without prejudice’ principle, which can only be used where a dispute already exists between the parties, by being available even where such a situation does not exist.

Whilst this proposal looks set to restore employers’ confidence in communicating with employees, there are some limitations. Currently ‘protected conversations’ will only be available in relation to unfair dismissal claims but not in breach of contract claims, for example.

The Bill offers benefits to employers in as much as it raises concerns around the dilution of employee rights and protections, but with the Bill still in its infancy it is likely amendments and debate will affect the framework that eventually comes in to force.


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