18 January 2013

In response to the Ending the Employment Relationship consultation, the government has confirmed that it will go ahead with policies that attack unfairly dismissed workers, including the introduction of a 12-month pay cap on compensatory awards for those who are unfairly dismissed and more measures to encourage financial settlement outside of court rather than justice through an employment tribunal for affected employees.

Jo Swinson, Employment Relations Minister, made the announcement yesterday (17 January 2013), describing employment tribunals as "costly for everyone" and commenting: "We need to tackle unrealistic expectations about the levels of compensation awards".

Seeing as the Coalition will be charging claimants fees of as much as £1,200 for an unfair dismissal case from this summer and they are introducing further caps to the compensation workers can receive for losing their livelihoods, it seems the government are intent on making it as "costly" as possible and ensure seeking justice through the courts does not pay off for vulnerable workers.

The overall cap on compensation awarded to those who have been unfairly dismissed is £72,300, but the government now want to add an extra cap of 12-months pay, meaning low-paid workers will first be ordered to pay legal costs then given a paltry sum in return.

Template letters should also be drawn up, the government says, to encourage settlement agreements outside of court, but employers will not be given a guideline tariff for how much they should pay unfairly dismissed workers. Instead, they will be given guidance on the issues they should consider when offering a cash settlement to a poorly-treated worker.

Last spring, venture capitalist and chief of payday loan company Wonga Adrian Beecroft recommended that the government bring in no-fault dismissal for microbusinesses (those with fewer than 10 workers). His plan was to allow such companies to take away people's livelihoods without good reason in return for a cash settlement.

After an outcry over these recommendations, the government said it would not be going ahead with Beecroft's plans. Yet yesterday's proposals - and the recent plans to swap job security for shares in employee-ownership arrangements - seem to do exactly that.

Furthermore, consultations have been launched into proposals to implement the Acas Early Conciliation process, reform TUPE legislation and change the regulatory framework for employment agencies. Shockingly, plans to introduce a service providing "bespoke, independent advice for cases of sickness absence lasting more than four week" through an "independent assessment" organisation, suggests a worrying move towards private Atos-like companies working on the employer's behalf.

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External links:

• Government response to the Ending the Employment Relationship consultation
• Early conciliation: consultation on proposals for implementation
• Consultation on reforming the regulatory framework for employment agencies and employment businesses
• Transfer of Undertakings (Protection of Employment) Regulations (TUPE) 2006: consultation on proposed changes

To follow the progress of consultations and changes to employment law, click here to see our consultation calendar