No Fault Dismissals – No Smoke Without Firing

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Proposed changes to Employment Legislation

Recently, Vince Cable, the Business Secretary, set out a raft of proposed changes to employment legislation in a bid to generate more “flexible labour markets”. The key proposals and their consequences are set out below.

Proposed Change: Firms with 10 or fewer employees can opt for “no-fault” dismissals. More details have yet to emerge, but the implication appears to be that “micro” firms will be able to sack staff without explanation if the dismissal is accompanied by compensation. Consequences: This is one of the most drastic changes as it effectively eradicates protection for employees of small businesses.

Proposed Change: Reducing the consultation period on planned redundancies from 90 days to 60, 45 or possibly even 30 days. Consequences: This reform is only applicable to businesses making more than 100 people redundant. Where fewer than 100 people are being made redundant the consultation period is already 30 days and this will not change.

Proposed Change: Claimants will be obliged to submit their complaint to ACAS before taking it to a Tribunal. Consequences: Currently all parties to a Tribunal claim are already contacted by an ACAS conciliator to explore the potential for settlement. Mandatory conciliation is likely to encourage settlement, but may also lengthen disputes.

Proposed Change: It is likely the Government will introduce Tribunal fees for submitting a claim and/or a claim proceeding to a hearing. Consequences: Whilst it will discourage spurious claims, it may prove onerous for those who have lost their job and source of income.

Proposed Change: Employees will be prevented from using the Public Interest Disclosure Act to “blow the whistle” about their own work contracts. Consequences: There is no cap on the compensation available in whistleblowing claims, making them an attractive option. This aims to thwart disingenuous whistleblowing claims.

Proposed Change: Employers will be allowed to have “protected conversations” with employees about issues such as poor performance without fear that they could be used as evidence in a Tribunal. Consequences: Without prejudice conversations with employees are currently permitted, but they are problematic and must be handled carefully to avoid accusations of discrimination and predetermined outcomes. It is unlikely that an employer will be able to say something “off the record” that directly contradicts what it says “on the record.”

For further information please contact Daff Richardson

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