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/ 17 Sep 2012

Redressing the Employment Law Balance?

Are Vince Cable’s proposals to reform Employment Rules and Procedures, announced on 14 September 2012, an attempt to redress the balance in favour of employers? This begs the question, does the current position favour employees?

Let’s look at the Business Secretary’s proposals:

Reducing the cap which applies to (successful) claims for unfair dismissal. This currently stands at £85,200 where the employee has been dismissed after 1 February 2012. This, you may think, is a large some of money. But for higher earning employees or those with long service and a pension, when they are unfairly dismissed their financial loss is likely to exceed the maximum, sometimes by a substantial amount. In other words, the effect of the cap is to limit the ideal that an employee, who has been found to have been unfairly dismissed, will be compensated for their actual loss of earnings.

Encouraging alternatives to litigation (Tribunals): Currently an employer may offer a settlement, often a sum of money and a reference, prior to or following a dismissal or circumstances where there is a dispute between them and an employee in return for the employee agreeing not to take any action against the employer at the Employment Tribunal. The agreement would then be formalised by using a Compromise Agreement on which the employee must have received legal advice from an appropriate legally qualified person. Vince Cable has proposed to rename Compromise Agreements “Settlement Agreements” and to produce guidance, through ACAS, to help employers and employees to reach an early settlement. In this author’s opinion, this appears to be barely newsworthy and merely helps to make a few reforms into a “package” of reforms.

One thing is for certain: from April 2013 most employees will be liable to pay a fee when issuing a claim to the Employment Tribunal. This will make it less viable for some low earning employees to make a claim.

Vince Cable’s new proposal will arguably make it less attractive for those higher earners and pension holders to bring a claim. Now we must ask ourselves: was there a bias in favour of employees previously? Comments welcome!

Hanne & Co’s Employment Law Team, consisting of solicitors David Taylor, Amy Walker and Harry Dronfield are able to advise on compromise agreements and are usually in a position to offer client’s prompt appointments at competitive rates. For further information, please contact info@hanne.co.uk.

By Employment Solicitor Harry Dronfield.
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