Aldridge and Brownlee Solicitiors

A number of key changes to employment law are being introduced in 2012, is your business prepared?

Small businesses in particular should take note of the changes that will be coming into force in the coming year as the cost of failing to do so can often have drastic effects.

The coalition government has put forward a number of proposals to reform the legislation governing employment and, while the finer details of many of those changes are not yet known, several key reforms have already been announced.

Perhaps the most publicised of the changes comes with the introduction of the Pension Act 2011. It provides for a change in the pension age for both men and women. As of 2018 the pension age for women will increase to 65. In 2020 the pension age for both men and women will increase to 66 and in around 2026 it will rise again to 67. This change is closely linked to the removal of default retirement age (DRA) and which means that workers can opt to continue working after the state pension age.

The year ending in March 2011 saw a massive 32% rise in age discrimination claims being brought in the Employment Tribunals; which emphasises the effect that scrapping the DRA and increasing the pension age is likely to have. Going forward employers are going to have to proactively ensure that they operate with an age friendly culture in relation to their employees.

In addition to the changes to pension age the government has also announced some important amendments to unfair dismissal. At present the qualifying period, for which an employee must be employed before they are able to bring a claim for unfair dismissal, is 1 year. The proposal, which is expected to be introduced in April 2012, is to increase the qualifying period to 2 years. The effect of this change will be that an employee who is dismissed with the first 2 years of their employment will not be entitled to bring a claim for unfair dismissal.

The change actually represents a step back in legal history as the qualifying period was originally introduced as 2 years; following high profile challenges to that period, claiming that it was discriminatory and would have a greater effect on certain groups of employees, it was reduced to the current 1 year period.

The government hopes to weather any such challenges this time round by presenting the change as a route to boost employment, by encouraging small to medium sized businesses to take on new staff and in particular younger staff. Critics however are saying that young people will be the hardest hit by the new law as they are likely to have been the last in and therefore the first out in order to avoid large redundancy payments to older staff with longer service.

Another area which is set to change in 2012 is ‘compromise agreements’ which are very common in the current climate. Compromise agreements are in effect a contract between an employer and an employee whereby they agree upon the payment of a sum of money to the employee in order to settle any claims that they may have against the employer.  Such agreements are to be replaced by ‘settlement agreements’ which are intended to be simpler and based on a standard wording.

The government has indicated an intention to introduce ‘protected conversations’ which would allow more open discussions about difficult issues without the risk of retribution.  Such conversation may be about performance, retirement and other sometimes sensitive issues. The protection would not extend to any action which is discriminatory or amounts to harassment so in practice its use may prove to be rather limited.

The plans on which we are awaiting further details are a review of the procedure for bringing unfair dismissal claims, a review of the procedural rules of employment tribunals, the effectiveness of the TUPE regulations - Transfer of Undertakings (Protection of Employment) Regulations - that protect employees rights and conditions when a business is sold or transferred and finally a simplified procedure for ‘micro employers’ with less than 10 employees to be able to dismiss their employees.

Gustav Patrick, Employment Lawyer with Aldridge Brownlee Solicitors, commented that:  “While the government has described these reforms as ‘cutting red tape’ and stated that the result will be a reduction in unemployment and an increase in investment, the devil will be in the detail. We are all going to have to wait and see how these reforms are to be implemented, businesses should monitor these reforms carefully in order to be ready to adapt throughout the year”

“2011 has seen a fast changing environment both in the workplace and in the employment tribunals. Employers should take the time to review their employment policies and procedures to ensure that they are up to date and cover important new areas such as social media, retirement, bribery and agency workers in accordance with the year’s legal developments. Once the changes to unfair dismissal are introduced it is entirely probable that other claims, such as discrimination, will increase dramatically.”

If you require any assistance or advice on any of the issues raised in this article please contact Gustav Patrick in our Employment Department on 01202 294411 or by email at gustav.patrick@ablaw.co.uk.