On 21 May 2012 the Government released Adrian Beecroft’s controversial “Report on Employment Law”. The report had been commissioned by the Department for Business, Innovation and Skills (BIS), as part of its ‘red tape challenge’, which is aimed at identifying areas of employment law that could be simplified in order to increase growth and help businesses create jobs.
The headline recommendations from the report include:
- Compensated no-fault dismissal.
This is one of the most controversial aspects of the report in that it recommends that an employer should be able to dismiss underperforming employees for no reason provided that, following consultation, employees should receive compensation equivalent to a redundancy payment and their notice.
- Extension of qualifying period.
Beecroft agrees with the recent extension of the qualifying period for bringing unfair dismissal claims from one to two years and considers that the period could even be extended beyond two years.
- Opt-out for small businesses.
The report proposes that businesses employing fewer than 10 people should be allowed to opt out of current (and proposed) regulations such as those relating to unfair dismissal, pension auto-enrolment, the right to request flexible working (other than for parents and carers), flexible parental leave and more.
Beecroft has suggested that the current law making employers liable for discriminatory comments made by customers or employees to another employee should be rescinded.
- Reintroduction of the default retirement age.
The report suggests that if monitoring shows that the abolition of the default retirement age deters employers from hiring older workers and/or has made it difficult to remove older workers, the default retirement age (albeit potentially at an age higher than 65) could be reintroduced.
- Streamlined capability procedures.
The report suggests that the process for proving that employees are not capable of performing their roles can be streamlined.
- Employment Tribunal process and awards.
The report disagrees with fines for employers who lose unfair dismissal cases. Beecroft suggests a review of the ACAS rules to determine whether they need to be simplified. He supports the introduction of tribunal fees for every claim but recommends that wealth, as well as income, should be used when assessing eligibility for fee remittance. It is suggested that Polkey reductions (i.e. where a tribunal reduces a compensatory award when the employee would have been dismissed even if the employer had followed a fair procedure) should apply to basic awards as well as compensatory awards. A cap of nine months’ pay is suggested on the compensation for loss of earnings that can be awarded in discrimination cases.
- Pension auto-enrolment.
In addition to the opt-out of pension auto-enrolment schemes for small businesses noted above, the report recommends that businesses with fewer than five employees should be excluded from the auto-enrolment scheme.
- Collective redundancies.
It is suggested that the statutory consultation period for employers wishing to make more than 100 people redundant should be reduced from 90 days to 30 days.
- Transfer of Undertakings Protection of Employment (TUPE).
The main recommendation regarding TUPE is that UK law should be changed to allow the transferee company to harmonise the terms and conditions of transferred and original employees from one year after the transfer. The report also recommends that the transferor should be allowed to make redundancies before the transfer in certain circumstances and suggests that the service provider provisions should be replaced (but does not make a suggestion as to what should replace the provisions).
The issue of compensated no-fault dismissals has caused the most comment in the press, particularly since it has evidenced tensions in the coalition, which has divided down party lines. Aside from the political debate, however, it should be noted that a number of the recommendations in the report are already in the Employment Law Review but subject to calls for evidence or consultation, as noted in the Government response.