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By Christopher J Sherliker

Those of you who have been reading the press can’t have failed to notice the Adrian Beechcroft report and the radical reforms he proposes.

Somehow, all the economic ills of the country are being laid at the feet of the ‘compensation culture’ which employers perceive is ‘out there’ amongst employees whom they seek to dismiss. The cry is that there are too many rights and regulation is excessive, hence there is a reluctance to hire employees.


Senior Employment Partner Nicholas Lakeland sets out the facts.

The Story so Far

On 6 April 2012 we saw one set of changes:

  • the unfair dismissal qualification period increased from one to two years for new joiners employed on or after 6 April 2012
  • unfair dismissal claims can now be heard by a judge sitting alone
  • the maximum amount of costs which judges can award to either party increased from £10,000 to £20,000
  • witness statements do not have to be read out at the hearing unless the judge otherwise directs
  • when a judge thinks that a claim has a limited chance of success, the maximum amount which he can order a party to pay as a deposit increased from £500 to £1,000
  • tribunals now have the power to order a party to bear the expenses of any witness to the proceedings
  • s.147 of the Equality Act 2010 has been amended to correct a drafting error relating to the settlement of claims under the Act by way of a compromise agreement

The Way Forward

The Enterprise and Regulatory Reform Bill (ERRB) which was laid before Parliament on 23 May 2012 brings forward yet further proposals:

  • there will be a mandatory period of ACAS conciliation, prior to acting via the Employment Tribunal as a last resort (ACAS being a publicly-funded independent organisation that aims to promote good employment relations)
  • there will be an extension of limitation periods in order to allow for pre-action ACAS conciliation, as well as the introduction of ‘legal officers’ to make decisions in cases where both parties reach a consensus
  • Employment Appeal Tribunal cases will be heard by the judge alone
  • the Secretary of State will be able to limit an unfair dismissal compensatory award to between the national median earnings and three times the median earnings – in 2010, the earnings median was £20,800, meaning that the Secretary of State can award from £20,800 to £62,400
  • the Secretary of State can limit the compensation for unfair dismissal to one year’s loss of earnings

In addition, at the committee stage on 19 July, a proposal will be introduced into the ERRB enabling employers to offer a without prejudice termination package in a manner which means they cannot be referred to Employment Tribunal proceedings. A standard form of settlement proposal will be available to employers for this purpose.

And Yet More to Come…

A variety of changes are also being mooted, which are either currently under consultation or in progress following Mr Justice Underhill’s review of Employment Tribunal rules of procedure and the latest BIS Consultation on Modern Workplaces. These include:

  • the introductions of a fee system in Employment Tribunals
  • a number of proposed changes to holiday, including the ability to carry forward from one year to another to reflect recent ECJ decisions
  • flexible working – the intention is to allow employees to ask more frequently and to allow employers to consider the personal circumstances of the employees
  • parental leave – after the initial 18 weeks this can be shared, with four weeks to be reserved for fathers
  • an increase in the period of unpaid parental leave from March 2013, when the current right to 13 weeks’ unpaid parental leave will increase to 18 weeks

And Then There is Adrian Beechcroft

Commissioned by BIS to identify areas of employment law that could be improved or simplified in order to help businesses create jobs, the report’s main headline-grabbing proposal was that, if we could not get rid of the concept of unfair dismissal altogether, the government should implement a system by which employers could "dismiss anyone without giving a reason provided they make an enhanced leaving payment".

Fortunately the ‘no fault dismissal’ proposal, as it has been dubbed, has now been ruled off consideration, but the tone of the Beechcroft Report is symptomatic of the trend towards blaming the economic ills on employment rights.

So what’s the Answer?

It’s true to say that we have seen a doubling of employment law cases going through the Employment Tribunal system.

Given the state of the economy and the number of redundancies, is it a surprise?

It is also true to say that the advent of ‘no win no fee’ advisors, as well as the ever increasing availability of legal expenses insurance policies, has enabled a far greater number of employees to bring successful claims. However, neither lawyers nor insurers will back claims with little hope of success. Lawyers don’t like to waste their time and lose money on hopeless cases and, if anyone knows how difficult insurers are about backing cases, they will realise that is not where the problem lies either.

Often the issues relate to unrepresented claimants who know no better. The lack of legal aid or any really rigorous advice pre-litigation is in itself a problem. The lay client does not know they have a hopeless case that they should not be litigating on, and there is usually no one independent to tell them.

More rigorous case management and greater judicial powers are the obvious answer. That, however, requires judges to have the time to case manage so they are confident that they are making proper judgements about the merits of a case. If I were a judge having to speed things through an overloaded, under-resourced system, I would not make hard decisions for fear of doing an injustice to claimants.

I would like to think that the ACAS pre-litigation system will perhaps assist claimants in understanding their position and prevent hopeless cases being put forward. Then again, that requires ACAS to be properly resourced so that it can do a proper job of bringing the parties together and not just act as a delaying factor in claimants bringing forward their claims.

One more thing. Perhaps some of the people who pontificate about too many rights might consider that we already have a very liberal system (the most liberal in Europe). Perhaps they might sit in on a few client meetings and listen to a few horror stories as to how badly employers have treated their former employees, who then find themselves out of work and without the means to support their families. For every hopeless case brought forward by a former employee, there are an equal number of hopeless defences put forward by employers whose management practices leave a lot to be desired.

Some of the proposed changes make sense, but only if they are given a fair chance of succeeding, with proper resources made available to ACAS and the Tribunals. Call me a sceptic but, in these recessionary times, I don’t believe the money will be found.

My own view is that, to increase employment, what is really needed is an economic upturn and the banks to get lending!

Added: 1st July 2012

Christopher J Sherliker is a partner for Silverman Sherliker LLP who provide legal solutions across a spectrum of requirements.  Find out more about Silverman Sherliker LLP.


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