Government announces extension of its employment law reform review

12 May 2011

The Government announced yesterday (11 May 2011) that it is to extend the current review of employment law to include consideration of compensation for discrimination, collective redundancy and Transfer Undertakings Protection of Employment Regulations (“TUPE”). In a recent press release the Department for Work and Pensions commented:

Compensation for discrimination. There need to be remedies for discrimination, but employers have expressed concern about the high levels of compensation sometimes awarded by Employment Tribunals in cases of discrimination - and the lack of certainty they have about the level of award they may be required to pay. Compensation levels for cases of discrimination are unlimited and employers worry that high awards may encourage people to take weak, speculative or vexatious cases in the hope of a large payout. This can lead to employers settling such cases before they reach a Tribunal.

Collective redundancy rules. Employers are concerned that the current requirement that consultation over collective redundancy runs for a minimum period of 90 days is hindering their ability to restructure efficiently and retain a flexible workforce. Employers in financial difficulty worry about how long they need to keep paying staff after it has become clear that they need to let them go. They also claim it is not clear from the legislation at what point consultation on redundancies should start or end.

TUPE. These rules implement a European directive and protect employees’ terms and conditions of employment when a business is transferred from one owner to another. These rules offer important protections but some businesses believe that they are `gold plated’ and overly bureaucratic.

Commenting on the reforms, the Chancellor of the Exchequer stated:

“If we are to support private sector growth and create jobs, we can’t shy away from looking at difficult issues like employment law. Examining these areas of the law which could be holding back job creation demonstrates the Government’s commitment to go for growth.”

Earlier this year, we issued an insight commenting on the commencement of the Government’s review of employment law in February 2011.

Click here to access relevant employment and pensions insight >>

We will keep you informed of developments.