HR & Management

Published

Vince Cable’s “radical” changes to employment law

4 Mins

Business Secretary Vince Cable today said he wants the process for getting rid of staff to be “simpler and quicker”. 

Before outlining the “radical” changes to employment law, which could save business leaders around £40m, Cable emphasised that the proposals are not (and that’s “emphatically not”) an attempt to give businesses “an easy ride at the expense of their staff”.

“We know that disputes at work cost time and money, reduce productivity and can distract employers from the day-to-day running of their business,” he said. 

The idea: help firms expand without making existing staff feel insecure.

The key changes include:        

  • A consultation on “protected conversations”, which would allow employers to have frank discussions about poor performance or retirement plans in an open way – “free from the worry it will be used as evidence in a subsequent tribunal claim”. Cable says that he wants to make it as easy as possible to reach a settlement without a tribunal. The government will be consulting on the detail of this proposal in the New Year.          
  • A “call for evidence” on the length of time required for a consultation period on planned redundancies. “We often hear that the 90-day period is too long and consequently it holds up the implementation of agreements that have already been struck,” said Cable. “We want to explore the consequences of reducing the current 90-day limit to 60, 45, or possibly even 30 days.”  
  • A requirement for all claims to go to the conciliation service Acas before reaching employment tribunal. “The average claim costs £4,000 and takes 24 weeks, which may not be an issue for a major employer but it is for an SME. And what often happens is that some employers decide to settle rather than face the time and expense required to defend themselves,” said Cable. He wants there to be a cost to starting a tribunal case. He’s looking into two options. The first proposes a system that involves a fee to lodge a claim, and a second fee to take that claim to a hearing. The second option proposes a £30,000 threshold, so those seeking an award of more than £30,000 will pay more.        
  • Options for a “rapid resolution scheme” for more simple cases to be settled within three months. Cable says this could involve an independent legal expert reaching decisions based on written evidence.

“The current system wastes a lot of resources, both in money and time,” comments Dan Watkins, director of find-a-solicitor service Contact Law. “The introduction of ‘protected conversations’ will offer employers the chance to have frank conversations with staff about their performances without fear of their every word being scrutinised and potentially used against them in a tribunal. But the whiff of off the record, extra-judicial chats will be a hard sell to both the trade unions and employees.”

Charlie Mullins, founder of £15m-turnover plumbing firm Pimlico Plumbers, applauds the changes: “If these proposals allow me to have a more honest and real relationship with staff, that helps sort out problems or if things aren’t going to work out with an individual, let them go and get someone more suited to the role then it’s a no brainer – bring them on.”

Read Vince Cable’s full speech here.

Do the reforms go far enough? Post your comments below.

Share this story

Spencer Skinner
Great entrepreneur, terrible investor
Send this to a friend