Vince Cable’s employment law reforms announced on Friday (14 September) attracted a lot of heated political and media comment.
The facts are slightly different. There are essentially two proposals
• Firstly, to rename compromise agreements – where an employer and employee agree that the employee will leave in exchange for a sum of money and usually a reference – settlement agreements. These “out of court” settlements have been around for years – the difference now is that the Government will also publish an ACAS code of practice on how employers and employees should use them effectively.
• Secondly, to limit unfair dismissal compensation to the lower of one year’s net pay or the median salary (currently around £26000). On the face of it, this seems a big cut from the current figure of just over £72000. However, only around 11% of successful claimants receive more than £20000 from a tribunal – and even fewer receive more than £30000. It‘s also unusual for a tribunal to award more than a year’s pay (the median unfair dismissal award is about £4600)
The government also announced the result of its consultation on the Transfer of Undertakings regulations (commonly known as TUPE). The upshot of the 22 page report is that any changes to the regulations will be minimal.
So what are the practical implications for employers? Really, not a great deal. The proposals don’t “cut red tape” or make it easier to sack people (though they may make it slightly cheaper if you get it wrong, but not by much). Neither are they an attack on “workers’ rights” (the only real losers will be senior managers who won’t be able to use the threat of tribunal as a negotiating tool for a pay off).
Finally – remember these are still only proposals. It’s unlikely they will become law before next April at the earliest.
As I commented on twitter, despite all the rhetoric and media speculation this is a classic example of the Law of Inverse Relevance – the less you intend doing about something the more you have to keep talking about it.
