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Employment

Consultation, Consultation, Consultation (plus a few actual reforms)

Writing in the months before the 2010 general election the then shadow business secretary, Lord Hunt, set out five ‘priorities’ for a Conservative government to address in the area of Employment Law. For the main part these were aspirational rather than grounded in the kind of technical detail that gets employment lawyers excited, but it is notable how little the legislative landscape has changed over the last two and a half years: all that is set to change in the coming months though.

There could be several reasons why to date none of the priorities set out by Lord Hunt have yet resulted in legislative change by the Government, but an absence of discussion is not one of them. There have been several exercises, seemingly endless consultations and reviews, the highest profile of which was the Beecroft Report delivered in 2012. There was also the recent headline-attracting statement by the Chancellor of the Exchequer on an intention to create a new class of ‘employee-owners’, which essentially involves businesses offering shares in exchange for employees abandoning certain, limited employment rights.

Meanwhile a new consultation exercise has begun into the Transfer of Undertakings (Protection of Employment) Regulations ("TUPE"). That is one piece of legislation that has been unpopular since at least 1981 (let alone 2010), when the UK could no longer delay implementing Europe’s Acquired Rights Directive into domestic law.

TUPE is perceived by lawyers and non-lawyers alike as being complex, although in their favour there has really only been one major revision in the past three decades (in 2006) which suggests that the Regulations may at least be familiar to employers even if they are unpopular. Perhaps that is one reason for maintaining the status quo: no-one has proposed a way to make those essential ‘core-provisions’ contained in the Acquired Rights Directive easier to implement and complicated TUPE Regulations are perhaps preferable to complicated and unfamiliar alternatives, with further litigation over the interpretation of the same.

Where there is potentially some room for change (and hence the consultation exercise) is that TUPE may go further than was intended by the European legislation. For example, there is no reference to "service provision changes" in the Acquired Rights Directive and it will potentially be removed from TUPE as a result (subject to the outcome of current consultation). Should such "service provision change" transfers be removed from the wording of TUPE, this would not, however, mean that outsourcing situations could be free from TUPE’s shadow. Instead, we would revert to the old case law on this topic which was far from straight forward. There is a real danger therefore that by attempting to simplify the wording of TUPE, any reforms could actually create further complications.

Notwithstanding the above, the so-called "gold-plating" of TUPE seems an obvious place to start, but in reality probably does not go anywhere near as far as advocates of change would desire.

Other proposals in terms of removing gold-plating include:

Making it easier to change contracts of employment after a TUPE transfer - at present employees’ contractual terms are preserved on a TUPE transfer. It has been proposed that only those changes which are because of "the transfer itself" will be void, as opposed to the current situation where changes that are "connected with" the transfer may also be void. However, the Government has suggested that changes purely for the purposes of harmonisation of terms and conditions of employment are unlikely to be possible.

Allowing dismissals arising from a change of workplace location after a TUPE transfer to not be automatically unfair.

The consultation also asks whether a transferor (i.e. the business from which employees are transferring) should be able to rely upon the transferee’s (i.e. the business to which employees are transferring) justification in respect of any pre-transfer dismissals.

Clarifying that transferees may, in certain circumstances, be able to commence collective redundancy consultations with affected employees prior to a TUPE transfer.

A possible repeal of the current 14 day rule for the provision of employee liability information to the transferee and replacing it with a requirement for the transferor to disclose information where it is necessary for the transferee and transferor to carry out their information and consultation duties.

Consultation closes in April 2013, but no date has been provided as to when any changes will be implemented.

Leaving TUPE aside, in some areas the time for talk is over as recent consultation has resulted in actual changes to the law. When it comes to the introduction of fees in the Employment Tribunal this marks quite a departure from the current system.

Since their inception it has always been the case that there has been no fee to bring a claim in an Employment Tribunal. Historically this was justified by the sentiment that money would be scarce for an individual who has just lost their job and so fees would be an unfair barrier for seeking "justice". However, the perception of many employers is that even a Claimant with a weak claim is in a strong bargaining position as it will cost the employer something to defend its position regardless of whether the Claimant is successful or not (in comparison to it potentially costing the Claimant nothing to bring the claim unless they decide to get representation). Added to which Tribunals sometimes seem frustratingly reticent to award costs against Claimants.

However, from summer 2013 a Claimant will have to pay an issue fee at the point of bringing a Tribunal claim and a hearing fee if the matter proceeds. There are two ‘levels’ of fees but for most claims (including unfair dismissal, discrimination and whistleblowing) it will cost £250 to issue the claim and £950 for the hearing. The stated purpose of this is not to deter the vexatious or unmeritorious claimant, but rather it is an austerity measure to ensure that users of the Tribunal share some of the costs. This seems slightly tokenistic as the cost to the Tribunal of administering and holding even a one-day hearing is going to exceed £1,200 and it is going to provide little comfort to the employer who will invariably have spent more than this in defending the proceedings. It is also not clear how the fee-remission scheme will interact with the newly introduced Universal Credit (i.e. the new single benefits payment for people who are looking for work or on a low income), but the proposal seems to be for recipients of the benefit to get a complete fee remission.

For those Claimants who have to find the fees themselves, the fact that they have had to do so may create a barrier to settlement (or at the very least reimbursement of the fees may have to be factored into any negotiation).

It will be interesting to see how the new fee regime works in practice - it could be that the fears are unfounded and the introduction of fees marks a positive turning point. However, any comparison with the County Court system suggests this may be optimistic as it has both an established fees structure and a robust costs procedure and yet it takes more than its fair share of weak, unmeritorious and sometimes vexations claims.

Only time will tell whether the proposed changes to TUPE and the new fee system will have a positive effect on the economy (which after all, is the Government’s key aim).

 

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.

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