January 9, 2012
In this client alert we review some of the key developments that have taken place in UK employment law during 2011 and look forward to some significant changes that are on the horizon for 2012.
Relaxation of UK Employment Law
In a widely anticipated speech, Business Secretary Vince Cable has announced a series of measures designed to ease the perceived burden of employment regulation on employers.
Whilst the UK is recognized as having one of the more flexible European labour markets, the last decade has seen a steady increase in employment protection legislation culminating in the new Agency Workers Regulations which came into force in October 2011 (see Gibson Dunn Alert, UK Employment — Key Developments for 2011, January 31, 2011).
Some of the measures announced are extremely controversial and not all may be implemented. However, there are grounds for hoping that the pendulum of UK employment regulation has begun to swing back toward the center. We summarize the key proposals below.
In addition to rights under their contract of employment, qualifying employees in the UK also enjoy protection against unfair dismissal. In an attempt to reduce the number of unfair dismissal claims clogging up the UK Employment Tribunals it is proposed that:
Reform of the UK Employment Tribunals
The UK Employment Tribunals, the specialist tribunals that consider most employment cases in the UK, were originally established as an accessible, informal, quick and inexpensive way of resolving workplace disputes. However Employment Tribunals have seen an increase in claims in recent years, and defending claims can be disproportionately expensive and time consuming. It is proposed that:
UK law protects those who "blow the whistle" against retaliation whether by way of dismissal or other detriment in employment. Employees who are dismissed for "blowing the whistle" are considered to be unfairly dismissed and enjoy enhanced protection. The Employment Appeals Tribunal have held that an employee who complains to an employer of a breach of that employee’s own contract of employment enjoys protection as a "whistle-blower" even where there is no public interest in the matter complained of. The Government propose to close what they describe as this "loophole".
The rules relating to agency workers including the UK’s recent implementation of the Agency Workers Directive are to be reviewed with a view to simplifying them.
In February 2011, the Government commissioned an independent review into sickness absence with the aim of reducing employers’ £9 billion annual sick pay bill. The review’s recommendation was to create a new independent medical assessment service for employees who are absent for more than four weeks. This would provide better occupational advice for employers to help employees back to work. In addition, by removing the fitness to work decision from the treating physician, it is hoped that such decisions will be more independent. The Government has indicated that they will respond to the report during 2012 and we expect reform in this area.
The Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE") protects the rights of employees who are affected by the sale of the whole or part of a business or undertaking or a change of service provider.
During the course of 2011, we saw a number of interesting decisions in the field of TUPE including:
The Conservative/Liberal Democrat Coalition Agreement states that the Government proposes to end the so called "gold plating" of EU Directives. This refers to the practice of implementing domestic UK legislation which goes further than the minimum required by virtue of the UK’s membership of the European Union. TUPE is an example of legislation that not only implements the Acquired Rights Directive (the "ARD") but also contains a number of provisions not found in the ARD.
As part of the Government’s wide-ranging review of employment law, the Government has published a "call for evidence" seeking views on how TUPE might be simplified. The call for evidence takes the form of a series of questions, and so while the Government’s intentions are unclear, the key areas under consideration include:
We are compiling our response to the call for evidence and would welcome the opportunity to discuss how these questions may impact your business on an individual basis. Please contact James Cox.
Collective Redundancy Update
Where an employer in the UK envisages engaging in a reduction in force, it is required to consult individually with affected employees and may also be required to consult collectively with appropriate employee representatives. The collective consultation obligation applies where an employer proposes to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less.
If the employer does not recognise a trade union and there is no other existing body of representatives, then the employer must hold an election to appoint representatives for the purposes of the collective redundancy consultation.
The minimum consultation period is 30 days, unless the employer proposes to dismiss 100 or more employees, in which case the minimum consultation period is extended to 90 days.
Where an employer fails to consult collectively, an Employment Tribunal may make a protective award of up to 90 days pay (uncapped) per employee. Redundancies made without prior collective consultation may also be unfair dismissals in which case further compensation may be awarded.
During the course of 2011, we saw a number of interesting decisions in the field of collective redundancies including:
Collective Redundancy Reform
As part of the Government’s wide ranging review of employment law, the Government has published a "call for evidence" seeking views on how the collective redundancy rules might be simplified. Here too, the call for evidence takes the form of a series of questions, with the key areas under consideration including:
Finally, during 2012 we expect the European Court of Justice to hear the case of United States of America v Nolan which will address the important question of whether the obligation to consult collectively arises: (i) when the employer is proposing, but has not yet made, a strategic business or operational decision that will foreseeably or inevitably lead to collective redundancies; or (ii) only after that decision has actually been made and it is then proposing the consequential redundancies.
2012 looks set to see a number of changes in UK Employment Law, many of which will be welcomed by employers. In particular, the UK government is considering far reaching changes in the field of both TUPE and collective redundancies. Gibson Dunn’s UK labour and employment team will be on hand to help clients understand and respond to these changes as and when they happen.
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these and other developments. Please feel free to contact the Gibson Dunn lawyer with whom you work or the following lawyers in the firm’s London office:
© 2012 Gibson, Dunn & Crutcher LLP
Attorney Advertising: The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.