The great employment law debate

IT'S been surrounded in controversy since it was mooted a year ago, but the proposals to transform employment law were announced last week amid outcry from trade unions and approval from the business sector.

Billed as a package to "simplify and speed up the process of ending the employment relationship when it breaks down, for the benefit of both employers and employees", the proposals to radically shake-up employment laws were announced by the Department of Business, Industry and Skills earlier this month.

Although stopping short of introducing "no fault dismissal" legislation, which was suggested in the Beecroft Report and which trade unions feared would allow employers to fire at will, Mr Cable introduced a raft of proposals which aim to cut down on tribunals and limit the amount claimants can be paid in damages.

Key features include:

• A consultation on settlement agreements to set out how the process will work in practice.;
• A new code of practice from employment arbiters Acas;
• A consultation on unfair dismissal claims, looking at the potential for reducing the compensation cap from £72,300 to either a cap of up to 12 months pay or a new, reduced, upper limit; and
• A consultation on employment tribunal rules, including proposals to make it easier for judges to dismiss so-called "weak cases" and reduce the number of preliminary hearings.

When he announced the consultation, Business Secretary Vince Cable said: "We have been looking across the range of employment laws with a view to making it easier for firms to hire staff while protecting basic labour rights.

"Our starting point is that Britain already has very flexible labour markets. That is why well over one million new private sector jobs have been created in the last two years, even when the economy has been flatlining.

"But we acknowledge that more can be done to help small companies by reducing the burden of employment tribunals, which we are reforming, and moving to less confrontational dispute resolutions through settlement agreements."

However, the moves have been widely criticised as a cynical attack on the rights of employees, with many of those opposing the legislation arguing it will fail to create jobs.

TUC general secretary Brendan Barber said: "We are very pleased that Adrian Beecroft's proposal to allow employers to fire employees at whim has been ignored. This would have set workers' rights back decades and created huge insecurity in workplaces throughout the country.

"However, reducing payouts for unfair dismissals will let bad employers off lightly and deter victims from pursuing genuine cases. This will feel like another slap in the face following the Government's decision to bring in fees for employment tribunals.

"For all the Government's talk that helping businesses to sack poor performing workers will make them more productive this is little more than a smokescreen to erode hard-won rights. Making it easier for bad employers to get away with misconduct is not the way to kick-start our economy and will not create a single job."

Ross Smith, the North East Chamber of Commerce's director of policy, thinks the if the proposals become law, they could bring more certainty for the business community.

THE word which has characterised the economic conditions of the past four years more than any other is "uncertainty".

Many NECC members find it incredibly difficult to predict the future and that makes them understandably hesitant to make investments.

Unfortunately, this extends to decisions about employment. So while we have seen faster private sector job growth in this region than any other over the past year, it has not been anywhere near enough to reverse the increase in worklessness since the onset of recession.

To change this, we need to reduce the risk for businesses. And this means reducing the red tape that tangles them every time they add one more person to the payroll.

In recent years businesses have had to adapt and conform to a raft of regulation that has restricted potential growth.

The Agency Workers Directive, statutory pension arrangements, employment tribunals, end of default retirement age, no win, no fee claims, Criminal Record Bureau checks... the list goes on and on.

The Government must make it easier for employers to address workplace disputes, encourage alternative ways of solving problems rather than through tribunals and give employers peace of mind that if staff underperform there is an effective mechanism to address the situation without fear of costly legal process.

Vince Cable's measures announced last week led to headlines accusing the Business Secretary of trying to make it easier to fire people, but these measures will stimulate confidence to create jobs.

Dismissal is always the last resort, but malicious tribunal claims and an antagonistic process place a huge burden on companies.

Invariably and unfortunately there are going to be times when businesses have to fire people, in these instances settlement agreements can serve to avoid costly disputes. Businesses must be confident that they can offer settlements without fear of future claims.

Tribunal awards vary tremendously. The current awards for unfair dismissal vastly exceeds the reality of most cases, but prevents many employers from seeking justice, and puts many off hiring. The upper limit should be reduced to increase employers' confidence to challenge claims and recruit staff.

With the country struggling to break the shackles of recession there is an urgent need for everybody to focus primarily on economic growth.

It is not that nothing else matters - it is that nothing else is possible without it. Stimulating the economy is about the future of every family in the North East. This requires boldness.

With little leeway to spend under the current fiscal plan, cutting regulation is a crucial tool in the Government's armoury to do this.

The onus is on the Government to move swiftly from consultation to implementation on settlement agreements and lower tribunal awards, as these proposals will boost confidence when businesses on the ground can see them in action.

Business is doing its bit for the recovery, particularly in the North East where unemployment continues to fall despite public sector cutbacks starting to bite. We now need to see the same level of commitment from Government.

Chris Jukes, northern region political officer at the trade union GMB, is against the proposals.

We believe this is an attempt to erode employment rights and a politicisation of the employment regulations in this country.

What the coalition Government is doing is appeasing the more right-wing elements in the hope of keeping it together. I don't think Vince Cable would have proposed these regulations, but he is no longer master of his own destiny.

We believe reducing the level of compensation employees can claim for unfair dismissal is most definitely the wrong way to go. More than 90 per cent of disputes are already settled out of court - any employment barrister will tell you that. All they had to do was consult with the relevant social partnerships and industry bodies.

The bulk of legislation we have now has been in place since the 1980s, with the most recent reforms brought in by the Conservatives themselves, in 1992, under John Major's Government.

Trade unions are not the relics of the 1950s and 1960s some people think they are. Now, we try to defend members' rights through discussion and negotiation. The number of strike days have never been lower, which shows how well the existing legislation works.

Most employers are good employers but laws are there to protect employees from the minority which are bad employers.

We also do not believe it will encourage employers to take on more staff - it will just enable bad employers to dismiss staff with fewer financial implications.

If you look at Germany, Europe's most robust economy, it has some of the most progressive employment legislation in the world, so it's just not true to say that good terms and conditions for employees is a barrier to growth.

Part of the problem is the increasing number of politicians who just move from university to being researchers at Whitehall to becoming MPs. They have never worked or lived in the real world, and it shows in their policies.

The Government is attempting to cynically erode employees' rights in an bid to curry favour from the right and keep the coalition together, at the expense of hard-working men and women.

It is a spivs' and cowboys' charter.