Partner Article

Does employment law favour the employee?

Catherine Wilson and Sarah Burke of Thomas Eggar LLP share their expertise on employment law.

Are you concerned that employment law favours the employee at the expense of the employer?

There has been extensive coverage recently in relation to the impact that current employment laws are having on businesses in the United Kingdom. Many feel that the current laws are preventing growth and that businesses are reluctant to recruit new employees for fear of running foul of the so called billion dollar employment tribunal industry.

Further financial costs to businesses also seem likely to be caused by the announcement in the recent Queen’s speech of the proposed introduction of flexible or shared parental leave from 2015. In response to these concerns we have seen the launch of various consultations by the Department for Business, Innovation and Skills, and in parallel the release of the now notorious Beecroft report. But are these changes necessary to return power back to the employers?

A number of issues are being considered, in particular:

The threat of unfair dismissal prevents employers from tackling under-performance

Since April 2012 the qualifying period in respect of employee’s rights to pursue claims for unfair dismissal rose from one to two years. This change should provide some comfort to employers as it will give them an increased opportunity to assess employee performance. Employers will still need to ensure at least a minimum level of fair process as certain claims based on discrimination and whistle blowing will be unaffected by such changes.

The Beecroft report expands further on this issue and proposes a number of options including a total removal of the concept of unfair dismissal (where discrimination is not involved) to an option involving compensated no fault dismissals where the employer can dismiss an employee without giving a reason
provided they make an enhanced leaving payment.

Family friendly policies are expensive in terms of operational and financial costs

The current maternity leave provisions and proposed shared parental leave provisions have also come under scrutiny. Certainly the increased take up by employees of extended maternity leave of up to a year may mean employers incur additional costs of maternity leave cover and training etc.

It is easy to understand how this could have an adverse impact on smaller business. Similarly flexible working has been blamed for creating a disjointed and dysfunctional workplace. It should however be remembered that the right to request is not the right to have that request accepted. Employees are also entitled to make only one formal statutory request in any 12 month period.

The new provisions in relation to shared parental leave are still awaited. There may be certain administrative head aches associated with “splitting” between parents. There is not currently any proposal to make additional payment. Fathers will only be entitled to receive any unused balance of their partner’s existing maternity pay entitlement else wise such leave will be unpaid and this seems likely to discourage participation given current discrepancies in male and female pay levels.

And finally, Employment Tribunals are biased in favour of disgruntled employees

Aside from the raw statistics which show, for example that 40% of claims for unfair dismissal were upheld during the year 2010-11, Government has already gone some way to address this need. With effect from April 2012, Employment Tribunal’s will be able to award a maximum of £20,000 costs against an unsuccessful and unreasonable party. Similarly, they will be able to order a claimant to make a deposit of up to £5000 as a condition of pursuing a claim judged to have weak prospects of success. The deterrent effect of such changes should not be under estimated and may well redress the balance in favour of employers. Additional changes are also expected during 2012 and 2013.

These are only some of the many proposals and reforms likely to affect the UK employment scene. However, it is clear that change is on its way and while some of the proposals are geared towards empowering employers we will have to watch this space to see the practical implications of such changes.

This was posted in Bdaily's Members' News section by Thomas Eggar .