New law shake-up backs small practices

‘Micro-firms’, (businesses of fewer than 10 members of staff) could now benefit from ‘relaxed’ employment legislation.

The government have been looking into workplace disputes and come to the conclusion that ‘micro-firms’ would benefit from ‘relaxed’ employment legislation.

Basically, smaller practices would have simpler rules to follow and be able to avoid certain regulations completely, with the balance shifting in favour of employers. The idea is to protect these ‘micro-firms’ from unfair compensation claims, cut costs and tighten up the process of managing disputes.

Business secretary, Vince Cable, announced a series of measures to be taken, in the wake of a consultation, to reduce bureaucracy and help businesses to make better decisions. The report focused on employment issues surrounding recruitment, dispute management and employee dismissal.

So, what’s new?

The results of the consultation will come into force from 6 April 2012 and reforms include an extension of the time period before an employee can raise a claim of unfair dismissal. This is being increased from one year to two years of uninterrupted employment with the business in question.

Micro-firms will be able to introduce compensated ‘no fault’ dismissals for employees that are under-performing. Provided they are given an agreed settlement, unproductive members of staff can be given their notice and must waive the right to subsequently claim for unfair dismissal. A consultation will look into the payment agreements to establish a standard process.

Tribunals are seen as unwieldy and expensive so the Government is planning an overhaul that includes the introduction of fees, which employees must pay in order to take their employer to an employment tribunal.

Other proposals include:

‘Protected conversations’ to encourage open communication between employers and staff, as these discussions are inadmissible in a tribunal. Businesses can discuss productivity and retirement issues and make decisions based on these conversations, rather than having to censor themselves out of concern of possible legal action in the future.

In general, employment tribunals are on the side of disabled employees and are not inclined to agree with discrimination towards them, no matter what the financial implications are to the employer.

However, a recent case has turned this on its head. Cordell v Foreign & Commonwealth Office came to the conclusion that there was no case for discrimination if the expense involved was considered unreasonable.

In this particular example, the full cost of promotion for the disabled employee, including all necessary support, was in the region of £145,000 a year. As things currently stand, this remains an unusual outcome for a tribunal and is not guaranteed for future disputes.

First published in March 2012

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