Government to reduce employment law 'burden'

In March 2011, the UK government revealed plans to help business by cutting the costs and ‘red tape’ of employment law. It is to scrap planned changes to laws on training leave, will not extend the right to request flexible working; will oppose changes to EU employment Directives; and will exempt small firms from new laws. Employment law is to be further reviewed during the current parliament, so as to cut the estimated £1 billion annual ‘burden’ of compliance for employers.

Plan for growth

The Conservative-Liberal Democrat coalition government, which took office in May 2010, (UK1005019I) pledged to cut regulation and ‘red tape’ affecting business, including a review of employment and workplace laws to ‘ensure they maximise flexibility for both parties, while protecting fairness and providing the competitive environment required’.

As part of its 2011 Budget, delivered on 23 March, the government unveiled a Plan for Growth (1.63 Mb PDF) aimed at creating ‘the right conditions for businesses to succeed, removing barriers that are preventing them from performing to their full potential’, including a reduction in ‘the burden of regulation that businesses have to comply with’. Specific measures include scrapping a number of planned employment regulations.

Employment law measures scrapped

To reduce the costs of employment–related regulation on businesses, the government has announced the following:

  • Since April 2010, workers in companies employing more than 250 staff have had a right to ask for time to study or train, on or off the job. The right was due to be extended to organisations with 250 or fewer staff from April 2011. However, following a consultation (UK1009029I), the right will not now be extended. The government estimates that the extension would have cost businesses up to £350 million (€392.6 million at 6 June 2011) a year. Scrapping it will, the government states, provide SMEs with the flexibility to manage their training requirements to meet their needs without spending time on administering the ‘right to request’ process, which is proportionately more costly for smaller businesses.
  • The statutory right to request flexible working, which applies in respect of children under the age of 17 (or 18 for children with disabilities), was due to be extended to the parents of children under 18 from April. This will not now occur, avoiding an administrative burden estimated at £500,000 (€560,865) a year.
  • Under the Equality Act 2010 (UK1010019I), ‘dual discrimination’ rules were due to come into effect in April 2011, allowing workers who believe they have been discriminated against because of two ‘protected characteristics’ (age, sex, disability, race, sexual orientation etc) to bring a combined claim. The government will not now bring forward these rules, which it says would have cost business £3 million (€3,365,190) per year.
  • The Equality Act introduced a requirement for businesses to take reasonable steps to prevent persistent harassment of their staff by third parties. The government regards this as unworkable, as employers ‘have no direct control’ over such harassment, and will consult on removing the requirement, saving about £330,000 (€373,910) a year.

The government will publish a timetable for a further review of employment law over the course of the current parliament, aimed at reducing the estimated £1 billion (€1.12 billion) annual burden for employers of complying with such law.

Other measures

The government, ‘recognising the particular burden that new regulation places on small businesses’, will exempt businesses with fewer than 10 employees and ‘genuine’ business start-ups from virtually all new domestic legislation for three years from 1 April 2011.

The Government will also launch a ‘major drive to revise burdensome EU regulations and Directives’. In the employment field, it will seek to prevent: ‘costly and regressive’ amendments to the pregnant workers Directive (92/85/EEC), as proposed by the European Parliament (EU1012021I); and costly revisions to the Directive on national information and consultation (2002/14/EC, 51Kb PDF), which is being reviewed by the European Commission.

Social partner reactions

The employers’ confederation, the CBI, welcomed the reduction in regulations affecting businesses and said that the government’s ‘commitment to reducing red tape will increase the amount of time that managers spend growing the business and creating jobs’. While stating that the moratorium on new legislation will be welcomed by smaller firms, the CBI added that the government should ‘think small first when it comes to making employment law – if it works for the smallest firms, then it works for businesses of all sizes’.

The Trades Union Congress (TUC) voiced concern about the exemption of micro-enterprises from new regulations, and the decision not to extend the right to request flexible working to employees with children under 18. However, trade union criticism was muted, possibly reflecting a perception that the reduction in employment regulation announced so far is relatively minor. More substantial changes are in the pipeline. One of them, notably, is a possible increase, from one year to two, in the qualifying period of continuous employment generally required before an employee may bring a claim for unfair dismissal (UK1102019I).

Mark Carley, IRRU/SPIRE Associates

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