Female entering the building.

Report Card

28 January 2013

We're casting our critical eye over the Government's employment law proposals and writing its school report.

Among the latest efforts to be marked are the proposed reforms to TUPE, the response to last year's consultation on "Ending the Employment Relationship" and the unveiling of the brand spanking new status of "employee owner".

We have concluded that they must try harder.

I must not copy someone else's work

The giddily anticipated (well, by me) TUPE consultation tables a number of wide-ranging changes to the 2006 regulations. The Government is aiming to improve and simplify the law to help to deliver growth for business while providing continuing protection for employees.

Some of the proposed changes might well help to achieve this aim although there are unanswered questions about how some changes will work within the confines of EU law and in practice (just call me a pedant). One proposal is to better align the concept of "economic technical or organisational (ETO) reason entailing a change in the workforce" with redundancy legislation. So, transfer connected dismissals arising from a change in workplace location would not be automatically unfair. Also welcome is the suggestion that pre-transfer redundancy consultation by an incoming employer should "count" for the purposes of discharging collective redundancy consultation obligations which arise after the transfer. All sensible stuff.

Where the Government and I part company is on its planned repeal of the service provision change regulations in its desire not to "gold-plate" the Acquired Rights Directive. Far from making TUPE "much simpler and less confusing for employers", repeal would simply return us to the pre-2006 arguments about whether TUPE applies to outsourcing transactions. Businesses will need more advice on contractual protections, more time will be spent deciphering European case law and litigation is bound to ensue. It is one thing not to gold-plate a Directive. It is entirely another to have a policy of simply "copying-out" Directives as an end in itself. What a missed opportunity to genuinely simplify the law and provide much needed clarity for UK businesses.

Show your working

Professor Brian Cox would shudder, but the unfair dismissal cap is like the black hole of employment law. It warps everything around it. So we are used to seeing strong unfair dismissal claims coupled with weak discrimination or whistleblowing claims simply to open the possibility that the cap might be breached when it comes to compensation. The problem (as every Respondent lawyer knows) is that employees taking a scattergun approach to instances of discrimination, and so discrimination claims are more time consuming and expensive to defend.

This irksome trend is set to increase in July with the Government's proposed reduction in the unfair dismissal cap to a year's salary. Instead of defending an unfair dismissal claim on its merits, more time and cost will be incurred by Claimants, Respondents and Tribunals in dealing with spurious discrimination claims.

The Government believes that a cap of around £70,000 creates an unhelpful perception that Claimants will get far more than a median award of around £5,000 would suggest. Fair enough - perhaps that is true. However, wouldn't this be better dealt with by addressing the perception rather than shifting the reality? In terms of our school report, we can't give any marks where the Government's solution doesn't appear to have any evidential link to the problem identified.

As Professor Cox said in a past life, perhaps things can only get better?

Please, sir, it's not fair

Who wants to be an employee owner?

Announced by George Osborne in October 2012, the idea is simple. The new employee waives any entitlement to unfair dismissal rights (among other things) and in return gets no less than £2,000 worth of shares in the employer. These shares would be bought back at on termination at a "reasonable value" but would it appears be subject to whatever bad leaver (i.e. forfeiture) provisions the employer offered.

The would-be employee would it appears not be able to reject the shares and instead enjoy employment rights. It's take it or leave it. Many might want to leave it. In a bearish job market, however, some may have little choice.

Co-written with Christopher Braganza, Senior Associate at RPC