19 April 2013

By Sarah Glenister, IER staff

This is the seventh and final article in our series exploring what the Coalition Timeline has taught us so far.

The Coalition’s attack on access to justice for workers is now a key issue and one that the Institute of Employment Rights has critiqued in detail in our latest publications Justice Deferred: a critical guide to the Coalition’s employment tribunal reforms, and Access to justice in employment disputes: surveying the terrain. The issue has come to the fore following the passing of legislation that makes it more difficult and, in some cases, prohibitively expensive, for employees to seek compensation for poor treatment in the workplace. But the removal of such legal protection for workers has been in the works for years.

On taking power, David Cameron hired millionaire venture capitalist and owner of payday loan lender Wonga Adrian Beecroft to provide recommendations for the reform of employment law. As of April 2013, almost all of his ideas have either come into law or will do in the near future.

The Coalition launched its first consultation into employment tribunal reform on January 27th 2011. It proposed a lengthening in the qualifying period that a worker must have been in their job before they could claim unfair dismissal (from one year to two years), routing all complaints through an Acas mediation process before they could be taken to tribunal, extending the circumstances in which a judge sits alone in an unfair dismissal hearing, and introducing new powers to weed out claims that are suspected of being vexatious or weak. The government stated that its reforms would encourage small businesses to take on new employees, with Prime Minister David Cameron announcing they “highlight our determination to ensure that employment law is no longer seen as a barrier to growth”. And the government has exhibited that determination to reduce workers’ rights ever since, making it more difficult for employees to access justice and decreasing their job security in a variety of ways; even forcing its plans through parliament in the face of major opposition, not just from workers, but also from employers, and even members of the Conservative party.

As David Renton and Anna Macey say in their publication Justice Deferred: a critical guide to the Coalition’s employment tribunal reforms, the justification for these reforms – that they will encourage job creation and growth – is inherently flawed and is unsupported by the government’s own evidence. A Department for Business call for evidence in 2011 showed that fewer than one per cent of employers said they were discouraged from hiring new employees due to unfair dismissal legislation. The Coalition’s argument also fails to recognise that the UK already has one of the most deregulated labour markets in the western world.

The need to reduce the number of claims reaching employment tribunals, listed by the government as a second major justification for its reforms, is also on shaky ground, with several critics noting that some of the legislation the government plans to push through to weaken workers’ access to justice could in fact result in more claims being taken to court.
Over the past three years, the Coalition’s attack on justice for vulnerable workers has taken three broad forms, discussed below.

Reforming employment tribunal law

Following the government’s January 2011 consultation, Business Secretary Vince Cable launched another in November of that year proposing the introduction of “protected conversations” – discussions that an employer could engage in with their workers, which would not be eligible for use as evidence in a claim for unfair dismissal. He also proposed encouraging an increase in the number of disputes resolved through compromise agreements (in which an employer pays a one-off compensatory fee to a worker when dismissing them unfairly), and through the Acas conciliation process.

In April 2012, changes to the law began to come in, including:

• Qualifying period for unfair dismissals extended to two years rather than one.
• Deposit Orders, which must be paid before a case goes to tribunal in some cases, lifted from £500 to £1,000
• Employment tribunals permitted to order costs of up to £20,000, raised from £10,000
• Witness statements no longer need to be read out
• Judges permitted to sit alone in most cases, including unfair dismissals.

These changes made workers’ jobs insecure for the first two years of their employment and began to discourage employees from seeking justice due to fears of the expenses that might be incurred.

But this was not far enough for the Coalition, which had released a consultation in March 2012 on proposals to allow micro-businesses (those which employ fewer than ten members of staff) to dismiss workers without good reason in exchange for monetary compensation. However, these so-called “no-fault dismissal” proposals sparked outrage in both the left and right-wing press and in May 2012, Vince Cable was forced to speak out against the plans and finally publish Beecroft’s report. The Business Secretary distanced himself from the proposals, stating: “At a time when workers are proving to be flexible in difficult economic conditions it would almost certainly be counterproductive to increase fear of dismissal.” But, as we will see in the following section, this particularly cruel proposal did not lie low for long.

It had also been proposed that fees should be introduced for those bringing claims to an employment tribunal and in July 2012 the levels of these charges were announced, reaching up to £1,200 for an unfair dismissal claim. The fees will be brought into this summer.

Many of Beecroft’s recommendations are currently making their way through parliament as part of the Enterprise and Regulatory Reform Bill, which was launched in June 2012. The Bill includes the following changes to the law:

• Early Conciliation – All claims to initially go to ACAS.
• Rapid Resolution – Legal officers will be given power to determine non-complex tribunal claims, rather than a judge.
• Settlement Agreements – The offer of a settlement agreement to an employee will not be permitted to be used as evidence in unfair dismissal cases.
• Unfair Dismissal Compensatory Award – A decrease in the award a worker can receive after being unfairly dismissed to 12 months’ pay.
• Judges sitting alone in Employment Appeal Tribunals – Remove the requirement for lay members to sit in on Employment Appeal Tribunals.
• Public Interest Disclosure Act – Whistleblowers will need to be able to prove their claims are in the public’s interest.
• Underhill changes – Changes to primary legislation, which may lead claims to be thrown out before they have even been to a tribunal.

Making en-masse redundancy easier

Another way to reduce job security for workers and make it easier for businesses to make en masse dismissals is to alter the right of workers to consult with employers during collective redundancies. In April 2013, the minimum consultation period for negotiations between unions and employers aimed at reducing the number of redundancies by looking for alternative solutions was halved from 90 days to 45 days.

Workers are also at risk of being made redundant when they are transferred from one company to another – an issue many public sector workers are currently facing as their duties are outsourced to private contractors. TUPE regulations are designed to protect workers during this process, but the government plans to weaken these rules in such a way that could see workers dismissed or have their pay and conditions lowered in order to private companies to lower their labour costs in the interests of profit.

Creating a new status of worker, exempt from basic employment rights

In a move that has been widely described as “Beecroft by the back door”, the government has also tried to force the idea of no-fault dismissal back into the limelight under a different name.

The implementation of a new status of worker, named by the government an employee-owner, would see employees forsake their fundamental rights to redundancy pay, to claim unfair dismissal and to request flexible working conditions or training, in return for shares in their organisation (the value of which may be negligible).

A consultation on this form of so-called employee ownership was launched in November 2012, and only a handful of the 209 responses had anything positive to say about it. Opposition was strong not just among the unions and workers, but also among employers and even some Conservative party members. But the Coalition insisted on entering the proposals into the Growth and Infrastructure Bill, and even after they were thrown out by the House of Lords in March, this week MPs voted them back in again.

If there was ever any question over what extent the Coalition is driven by ideology rather than evidence, or even popular mandate, its shares-for-rights scheme dispels these doubts immediately. Apart from a bizarre desire to follow the recommendations of the millionaire owner of a morally-questionable business, there appears to be no good reason to keep trying to force this policy through the parliament. But as the Coalition Timeline has shown time and again, ideology tends to win out, and so even if the shares-for-rights plans are never approved, we fully expect to see no-fault dismissals rear its ugly head in another form as long as we allow the Tories to keep their seats.

Click here to visit the Timeline. In order to see just pay and benefits stories click the spanner in the bottom left of the timeline, select ‘categories’, then select ‘redundancy and grievances’.

Click here to see more articles from this series