Coalition reviews employment law

The government has announced a review of three key employment laws to help reduce the legislative burden on businesses.  However, since they also say “legislation will not necessarily be the route to implement any change if there is a case for reform”  we are not expecting action soon.

1. Imposing a cap on compensation for unlawful discrimination, reflecting the maximum for unfair dismissal, which is currently the greater of £68,000 or twice the claimant’s annual salary.  While this may reduce speculative claims, in practice tribunal awards are low.  The median in 2009/10 was less than £6,000.  More importantly, EU law may prevent the imposition of a cap because it precludes compensation being ‘restricted by the fixing of a prior upper limit’.
2. Removing the so-called gold plating of UK TUPE regulations, which extends them beyond the requirements of EU law.  For example, the extension of the regulations about a service provision change (SPC) to situations where a business outsources an activity, or changes the contractor providing a service, even where this does not constitute a ‘transfer of undertaking’ as defined by European law.
3. Reduction of the minimum consultation period requirement for 90 days’ consultation when 100 or more employees face dismissal, which may be hindering employers’ ability to restructure efficiently.  Collective consultation is another area in which UK and EU law is inconsistent, and a ruling is also expected on how far employers are obliged to consult with employee representatives over the strategic business reasons behind their redundancy proposals.