The small print of employment law reform

by Laurie Anstis on March 26, 2012

I’ve recently spent some time going through the latest documents from the government on employment law reform, including the BIS Employment Law Reform Annual Update 2012 and the call for evidence on dismissal and compensated no-fault dismissals.

There is some interesting detail which struck me in the small print, and which gives a little more of the flavour of what is to come:

From the annual law review:

Reforming discrimination awards isn’t possible, due to the European dimension (para 4.26) but (para 4.30) information on median awards will be included in tribunal claim forms.

I had not seen this before. It seems an interesting idea. Presumably the reasoning behind this is to set realistic expectations for employees, although it does lead to the question of whether employees with lower-value cases will see this as some sort of target to aim for. Will the median become the norm for settlement?

From the call for evidence:

The UK is assessed as a “successful employment performer” in the OECD’s review of employment regulation (page3).

Both employers and employees will be able to initiate “protected conversations” (page 14).

If a regime of compensated no-fault dismissal is introduced, the old rules will remain so that an employer will still be able to dismiss an employee without payment of compensation if they had a fair reason for dismissal and acted reasonably in carrying it out (page 14).

I had thought there would be an exception for gross misconduct dismissals but had not appreciated that the employer could still rely on the old rules if they wanted to.  It will be interesting to see what is proposed to happen if the employer opts to do this and a tribunal later find that the dismissal was not justified – will the compensation payable in such a case be permitted to exceed what would be payable under a compensated no-fault dismissal?

There are (maybe) 400,000 dismissals a year, and with around 50,000 unfair dimsissal claims brought each year it seems that 1 in 8 dismissals results in an unfair dismissal claim (page 23).

That 1 in 8 figure seems high to me, and even the government seem doubtful about the figures. As we have seen before, employment tribunal statistics are not necessarily what they might first seem to be. Presumably the total number of dismissals does not include any alleged constructive dismissals, whereas the unfair dismissal claim figures would. Later on in the document BIS give a figure of 6.5% of dismissals resutling in unfair dismissal claims, although this seems to exclude redundancy dismissals. They also say that 18% of unfair dismissal cases are cases of alleged constructive dismissal. If this is true then, say, 80% of the 50,000 or so unfair dismissal cases will result from actual dismissal (incluiding redundancy). That would give an approximate figure of 1 in 10 actual dismissals resulting in an unfair dismissal claim.

There are 5.71 disciplinary sanctions per 100 employees (page 24).

Overall it appears that a higher proportion of businesses agree with the proposition that “UK employment regulation is fair and proportionate” than disagree (page 29).

The source for this is cited by BIS as “recent survey evidence” commissioned by them. Does anyone know if this survey evidence is online? I could not find it, and would be interested to read it in full. The table we have in the call for evidence shows that the tendency to agree with the proposition increases with the size of the employer. The only category of businesses who disagree are “sole traders”, but it’s not really clear what is meant by “sole trader”.

The table shows “sole traders”, and there then follows a breakdown by number of employees, from 2 upwards. There is nothing to stop a sole trader employing many members of staff, but the way in which the table is broken down suggests that here “sole trader” might being used as meaning “self-employed”. That might explain why there is no column for those with 1 employee. In a loose sense, the self-employed trader has one employee – themselves. If this is what was meant by a sole trader, then they won’t have had any direct experience of employing anyone. Indeed, they may well once have been employees themselves. As Rick reminds us in Flip Chart Fairy Tales many self-employed people will once have been employees, and may well have turned to self-employment on losing their jobs.

What if the “sole trader”‘s disagreement with the proposition is actually on the basis that employment regulations needed to be stronger? For many, their only experience of employment regulation would be as an employee, rather than an employer. Without seeing the full survey evidence we cannot really tell whether the sole trader is seeking more, or less, regulation.

Of course, it may be that the sole trader wants employment regulation to be cut back, in order that he or she can take on more staff.  [This section edited 26 March 2012.]

Unfair dismissal law is not on the list of top 10 regulations deterring businesses from taking on staff (page 29-30).

The highest is health and safety, a particular concern of micro-businesses.

The automatically unfair reasons for unfair dismissal (trade union activities, whistleblowing (itself up for reform) etc.) would remain in place if compensated no-fault dismissals were introduced (page 41).