Analysis on the employment law reforms under the Enterprise and Regulatory Reform Act 2013

Table of Contents

Executive Summary

Introduction

Report
The Current Economic Climate
Reforms under the latest government
Introduction of tribunal Fees
Change in qualifying Periods for employee claims in Unfair Dismissal
ACAS conciliation
Pre-Termination Negotiations

Conclusions on the changes

Bibliography

Executive Summary

This report aims to provide an analysis on some of the employment law reforms under the Enterprise and Regulatory Reform Act 2013. The coalition government have implemented some substantial changes that have affected the way in which employment law works in practice. The changes reviewed are; the change in qualifying dismissal, the introduction of tribunal fees, ACAS mandatory conciliation and pre-termination negotiation.

Methods of analysis include, obtaining information from the department for business and industry and ACAS comparing the amendments in the law with figures from the office of national statistics with a view to establishing a correlation between the reforms and the employment statistics. This report also focuses on comments from secretaries of state and legal commentators to compare the differing viewpoints and establish the potential effect against intended impacts.

Results of the analysis into the reforms show that there is almost certainly an infringement on basic workers’ rights. The infringements come in the form of increasing qualifying periods, introduction of tribunal fees and adding additional steps for potential claimants to complete before they can bring any claim against an employer.

Commentators describe the reforms as attacks and ask questions as to access to justice. The reforms have even prompted a large employment union to bring a judicial review case against the government.

This report concludes that whilst there is the potential for these reforms to have a significant detrimental effect to employees and workers individually, overall on a collective basis the benefit has greater potential to increase employment rates. The implementation of the changes has reduced the fear factor and perceived risk of hiring employees and can be seen to a raise employment statistics and have a more flexible working environment leading to a better employment relationship between employer and employee.

Introduction

Employment Law is an area of law that is continually developing and remains a controversial topic for discussion. It has been reported that “employment law rarely stands still͙ and since 2009 the Supreme Court has heard more cases concerning employment than any other practice area”¹. Unemployment and employment matters over the recent years have always been something at the forefront of election campaigns.

The conservative’s manifesto in 2010, from the latest election, contained a promise of training for the unemployed; aiming to create 50,000 more jobs² and to restore employment legislation from Europe³. The Labour party in their manifesto promised to create 200,000 jobs⁴ through their future jobs fund and training for ‘young people’ who had been out of work for six months. They further promised anyone out of work, for more than 2 years, a guaranteed work placement. They planned to achieve this by having a budget of one billion pounds set aside. The liberal democrat’s manifesto was unsurprisingly in favour of employee rights where employment matters were concerned. They promised ‘blind applications’ where gender was involved on application forms⁵ and wage audits for companies employing over one hundred to combat discrimination. The liberal democrats’ also wanted to fully fund foundation degrees and fund adult apprenticeships in the hope of creating 15,000 jobs⁶.

As can be evident from each main party’s manifesto, there was a huge scope of ideas for the employment reform and large allocated budgets. This supports the idea of this ‘ever changing’ employment sector, as each party had their own ideas for improvement and with elections every five years, the future for employment is set to continue on the route for change.

The conservatives, since coming into power, in coalition with the liberal democrats, have made some substantial and significant changes to employment law. The reforms do appear to favour businesses opposed to individual rights, however, this is to be expected from a largely conservative government. The government has made frequent references to ‘cutting the red tape’ and the ‘red tape challenge’ with an effort to remove potential barriers to employers, arguably their reforms are aimed at attempting to achieve this.

The majority of the reforms will come into effect by virtue of the Enterprise and Regulatory Reform Act 2013 (ERRA). This Act was heavily influenced by a report which was written by Adrian Beecroft (The Beecroft Report), a large donor to the conservative party, who has been labelled as “a multimillionaire who made a career out of cutting jobs”⁷. Although not all of his suggestions have been codified, many have in one way or another. This does leave the assertion that the government is looking to reform in favour of businesses.

This report will look into some of the reforms the government has made, namely those that appear to have the objective to increase employment. In particular it will pay attention to: the reforms in relation to unfair dismissal; the introduction of tribunal fees; financial penalties on employers; early conciliation via ACAS and pre-termination talks. Having looked into these areas of reforms and employment statistics an evaluation of the effectiveness of the reforms can be drawn.

Report

The Current Economic Climate

The recession that hit towards the latter part of 2007 and continued to late 2009 has caused many job losses and employment figures to drop. The recession caused many business closures and business losses which has adversely affected the overall job market. The reforms this report outlines appear to have been put in place in an attempt to strengthen the employment market.

The latest statistics⁸ show that employment for employees aged 16 to 64 is up to 72.1% up by 0.3%, this is from a 0.6 increase earlier in the year. The employment rates are continually improving with unemployment rates dropping. The percentage of economically inactive persons aged 16 is now at only 7.2% down by 0.4% from July to September and down another 0.6 earlier this year.

illustration not visible in this excerpt⁹

Chart 1, above, illustrates the changes comparing October to December 2013 with the previous years statistics. It shows that there are 396,000 more people in employment and 161,000 fewer people unemployed. As can be seen, employment issues are affecting a vast number of people within the United Kingdom and, therefore, any employment reforms are of a high importance. In practicable terms, more people in employment could result in more claims for breaching employment rights and other issues between the employer and employee. The influx in employment figures could also be evidence to the effect of the reforms that have been put in place under the latest government.

Reforms under the latest government

Introduction of tribunal Fees

Employment tribunals were created in the 1960s, in what can be described as more relaxed and informal approach to workplace disputes. In addition to this, employment tribunals were also able to offer expertise in a way that the civil courts could not.

With effect from 29th July 2013 tribunal fees will now be payable should any employee or employer wish to commence action¹⁰. The fees are not retrospective so any claim in motion or in the system will not be subject to the fee, however, all appeals following on from a ‘fee free’ claim will attract the new fee. The new fees for Type A claims, an issue fee of £160 with a hearing fee of £230,For Type B claims an issue fee of £250 and a hearing fee of £950¹¹ will be charged.

Type A claims will be for issues such as; unpaid wages, payment in lieu of notice, redundancy payments; and your employer refusing you time off to go to antenatal classes¹². These types of claims are aimed at the simple cases that can be quantified easily. Type B claims are for the ‘more complicated cases ’ such as; unfair dismissal, discrimination complaints and claims under the Public Information Disclosure Act (whistleblowing)¹³, which are likely to be the majority of claims brought before the tribunal.

To compare these fees, the most direct comparison for the potential justification of them is to look at the current fees for county court. The fee for issuing a claim in the county court for up to £5,000 is currently £100¹⁴. The hearing fees for civil cases range from £325 for up to £3,000 and £545 for fast track claims which is usually for claims of £10,000 - £25,000¹⁵. The current median award at tribunal are between £4,000 - £6,000 depending on the claim and whether it relates to unfair dismissal, race etc¹⁶. The comparison could, therefore, be drawn to say the more used class, Class B, will cost an applicant a total of £1,200 in issuing and hearing the claim at the tribunal whereas it could only cost £645 in the county court for an average claim, nearly half the cost of the new fees.

The fees have been somewhat controversial by academics and unions alike. The introduction of fees has been the most debated of all the law from all of the government’s reforms with many academic reports and even a judicial review brought by one union.

The reasoning behind the change can be simply phased as an effort to save the government money and increase efficiency. Justice minister Helen Grant said “it is not fair on the taxpayer to foot the entire £74m bill for people to escalate workplace disputes to a tribunal”¹⁷. This is not an onerous statement from the Justice Minister and the argument that users of legal services should pay for them is a very credible one. She also went on to say that “we are encouraging quicker, simpler and cheaper alternatives like mediation”¹⁸ this links with the ACAS conciliation and encouraging disputes to be discussed before claims are launched. In addition, by introducing the fees the government can offset some of their “planned 23% reduction in budget over 4 years which began in 2011”¹⁹.

Despite fairly transparent reasoning behind the introduction of the fees there has been some significant opposition to the fees. Andy Prendergast president of the GMB Union said “the imposition of such fees represents the latest in a number of attacks on employment rights by the government”²⁰. The descriptive word attack elicits the strength of the opposition against this reform, ‘the latest’ also suggests the continuing infringements of rights as the union see it.

[...]

¹ Employment Law 2014 LPC Guide, Introductory Note

² BBC News - At-a-glance: Conservative manifesto. 2010

³ Telegraph. Conservative manifesto: 2010 general election party policy

⁴ The Labour Party Manifesto 2010, Pg 2:2 - 2:3

⁵ The Liberal Democrat Manifesto 2010, Pg 31

⁶ Ibid, Pg 39s

⁷ Back to the Future: Employment Law under the Coalition Government. 203 at 206

⁸ Labour Market Statistics, February 2014, Pg 1

⁹ Ibid, Pg 2

¹⁰ Employment Tribunal and Employment Appeal Tribunal Fees Stakeholder factsheet

¹¹ Ibid

¹² Civil and Family Court Fees, Information Leaflet EX50

¹³ Ibid

¹⁴ Make a court claim for money - GOV.UK.

¹⁵ Civil and Family Court Fees, Information Leaflet EX50

¹⁶ Employment Tribunal Awards, Morton Fraser Solicitors 2014

¹⁷ BBC News - Unison cleared to challenge employment tribunal fees

¹⁸ Ibid

¹⁹ Employment Tribunal reforms to boost the economy 409 at 15

²⁰ BBC News - Unison cleared to challenge employment tribunal fees