Government announces employment law reforms

In November 2011, the UK government outlined a range of employment law reforms intended to reduce the impact of regulation on businesses and encourage recruitment. These included substantial changes to the employment tribunal system. Employer bodies generally welcomed the government’s announcement. However, trade unions were highly critical of the measures, saying it was more important to address the problems firms have in getting bank loans, because of the economic crisis.


On 23 November 2011, the UK coalition government announced a range of reforms and consultations intended to reduce the impact of employment regulation on businesses and encourage recruitment. The government confirmed its intention to raise the qualifying period of employment before an employee can bring an unfair dismissal claim, and introduce fees for taking cases to employment tribunals. It also called for evidence on further potential reforms such as introducing special measures concerning dismissals in small firms and changing the consultation period for collective redundancies.

Announcing the measures, Business Secretary Vince Cable said: 'Many employers still feel that employment law is a barrier to growing their businesses’ He argued that the government’s proposals would re-balance employment law while keeping necessary protections for employees. He insisted they were ‘not an attempt to give businesses an easy ride at the expense of their staff’.

Employment tribunals

A number of proposals designed to discourage employment tribunal claims stem from an earlier government consultation on procedures for resolving workplace disputes (UK1102019I). These include:

  • doubling the qualification period for unfair dismissal from one to two years from April 2012 (UK1110019I);
  • requiring all tribunal claimants to be offered pre-claim conciliation by the Advisory, Conciliation and Arbitration Service (Acas);
  • consulting in the new year on the idea of ‘protected conversations’ which would allow employers to discuss issues like retirement or poor performance in an open manner with staff without this being used in any subsequent tribunal claims;
  • initiating an independent review of the existing rules of procedure governing employment tribunals;
  • considering whether and how to develop a rapid-resolution scheme which will offer a quicker and cheaper alternative to determination at an employment tribunal.

The Ministry of Justice is to publish a consultation on the introduction of fees for anyone wishing to take a claim to an employment tribunal to ‘encourage claimants to consider seriously the validity of their claim’. The consultation will seek views on two options:

  • requiring payment of an initial fee to lodge a claim, and a second fee to take that claim to hearing;
  • introducing a GBP 30,000 (€36,058 as at January 5, 2012) threshold, obliging those seeking an award above this level to pay more to bring a claim.

Small firms

In response to the argument that dismissal laws are too onerous for small businesses, the government intends to seek evidence on:

  • introducing the concept of ‘compensated, no-fault dismissal’ for businesses with fewer than 10 employees;
  • simplifying existing dismissal procedures for small businesses.

Redundancies and business transfers

On its website, the Department for Business, Innovation and Skills has issued a call for evidence on collective redundancy consultation rules, asking whether the current 90-day minimum period for more than 100 redundancies can be reduced. Ministers say they are keen to see what impact current requirements have on the restructuring of businesses, whether they act as a barrier to employer flexibility in the labour market, and how any change might affect employees’ access to alternative employment or training.

The department is similarly seeking evidence on the Transfer of Undertakings (Protection of Employment) Regulations which employer bodies have criticised as too complex and bureaucratic.

Social partner reactions

Employer bodies generally welcomed the government’s announcement. Katja Hall, Chief Policy Director for the Confederation of British Industry (CBI) commented:

The government has listened to our concerns about how employment law is acting as a barrier to creating growth and jobs . . . With unemployment rising, we need to get on with these changes to give employers the confidence to hire.

Terry Scuoler, Chief Executive of the Engineering Employers’ Federation (EEF) said: ‘These measures will allow companies more flexibility to create the employment opportunities our economy urgently needs’.

However trade unions were highly critical of the government’s package. Brendan Barber, General Secretary of the Trades Union Congress (TUC) said:

Reducing protection for people at work will not save or create a single job. It’s not employment law that is holding firms back, it’s the tough economic climate and the problems many companies are having getting the banks to lend to them that’s to blame.

Mark Hall, IRRU, University of Warwick

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