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Employment Law

Volume 724: debated on Monday 31 January 2011


Asked by

To ask Her Majesty’s Government whether they have plans to revise employment law; and, if so, what consultations have been undertaken, and with which organisations.

My Lords, the Department for Business, Innovation and Skills is leading a review of employment laws to ensure that we maximise flexibility for employers while protecting fairness for employees and provide the competitive environment required for enterprise to thrive. This is a rolling programme over the length of the Parliament, and individual departments are engaging with representatives of employer and employee groups. As part of this, last Thursday we announced a consultation on reforming the employment tribunal system, which followed discussion with a range of stakeholders including the CBI, the TUC and the British Chambers of Commerce. This consultation will last until 20 April 2011.

My Lords, I thank the noble Baroness for that response, but the Business Secretary last week announced a revision of employment law to make it easier for employers to dismiss people and more difficult for employees to allege unfair dismissal and to refer cases to a tribunal. Indeed, it will be impossible to seek redress unless the employment has lasted for two years or more. In other words, that will apply to a large section of the workforce. This is at a time when many working people are already concerned about employment and their future prospects. What does the Business Secretary think he is doing? Surely he should be doing everything possible to keep people in employment rather than on benefits.

My Lords, we have announced that we are considering increasing from one year to two years’ service the qualifying period before an employee can claim for unfair dismissal. This change, if implemented, would return the law to as it was until 1999. We believe that this is fair to employees and employers. It is fair to employers, because it gives businesses the confidence to take on staff that they may not have employed otherwise, particularly in small and medium-sized companies. It will also encourage employees to have a longer time to prove that they are the right person for the job and a longer time to prove their skills, and we hope that fewer and fewer cases will finish up in the courts. We feel that this is a good move and we hope that the Opposition will help us to develop it through the consultation period, which will last until 20 April.

My Lords, is the Minister aware that someone is trying to set up an all-party micro-business group? Is it not a fact that in order for this economy to recover, lots of little businesses need to be set up and to develop? They, above all, need to have these extra consultations—I speak after 20 years of sitting on an employment tribunal—and to be able more easily to establish themselves and provide the jobs that we all think are so necessary.

I thank my noble friend for that encouraging question. We are hoping to achieve earlier resolutions to workplace disputes so that both parties can resolve their problems in a way that is fair and equitable for both sides without having to go to an employment tribunal. We want to ensure, when parties need to come to an employment tribunal, that the process is as swift, user friendly and effective as possible. We hope very much indeed that we will be able to use ACAS more and more, and we are consulting with it at the moment.

My Lords, does the noble Baroness agree that extending from one year to two the period for which one must be in employment in order to claim for unfair dismissal in the industrial employment tribunals would represent a serious reduction in employee rights, which have been developed over the years? As she rightly said, the legislation has been there since 1999, due of course to the efforts of the Labour Government at that time to ensure that where there is inequity between the power of the employee and the power of the employer, fairness should be achieved through the work of the employment tribunals.

My Lords, we really feel that this will be a better way of going forward for both sides. What we are looking for here is flexibility for businesses, especially small and medium-sized businesses, to give them confidence, and fairness for employees. We hope and we know that the so-called “day one rights” will stay in place. The proposals will not affect the existing “day one rights” of people when they start to bring a case for unfair dismissal; for example, when they believe that gender, race or some other form of discrimination has taken place, or where someone is dismissed for exercising their legal rights, such as asking for a written statement or to be paid the national minimum wage. The proposals relate to the areas where we do not wish people to rush first to a tribunal. If the qualifying period is only one year, it means that everything starts to happen too quickly. I know through my business experience people who have come to work with no experience. It takes them a while to get used to the job, and extending the time will make the employer and employees take a better look at each other and see whether they can keep themselves together, rather than rushing to tribunals and not going to ACAS first.

My Lords, does the Minister agree that the proportion of employment tribunal claims involving employees who have been working for between one and two years is very small indeed—well under 5 per cent—whereas the impact of the Government’s changes will, at this particularly crucial point, encourage employers across the country, particularly in small and medium-sized enterprises, to take on additional staff?

My Lords, I believe that not to be so. We hope to put in place all sorts of measures to ensure that employers behave as they should. The consultation period should be open to as many people as possible. We hope that many will take the opportunity to help us to ensure that we get this legislation correct.

My Lords, is the Minister really saying that it will take more than a year for an employer to assess whether an employee is suitable in their employment?

My Lords, is the Minister really saying that it takes more than a year for an employer to assess whether an employee is suitable in their employment? Does she agree that part of the problem, and the reason why there are so many employment tribunals, is the lack of knowledge and application of current employment laws?

I shall be careful how I answer the noble Lord because, just a little while ago, he was standing where I am standing. I think we are on the right track with this. We have so much evidence that small businesses in particular are not employing people. They are not growing as they should and they are afraid of taking on people and having to go to tribunals. All in all, I think this is the right way to go forward.