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Posted on: 29 Oct 12


Plans were announced by the Government (14 September 2012) to give employers more “flexibility” and “reduce employment law red tape”.

Plans were announced by the Government (14 September 2012) to give employers more “flexibility” and “reduce employment law red tape”. Below, we give details of the announcement:

  • Introduction of “settlement agreements” and new template documents – the aim here is to allow parties to settle disputes earlier without the need to take a claim to an employment tribunal. It is proposed to simplify compromise agreements which are seen as being too legalistic However, just how far they can be stripped back into a simple form agreement which does not leave the employer exposed to future claims, will have to be seen. As part of this exercise, ACAS will also be producing a code of practice on settlement agreements.
  • Cap on unfair dismissal compensatory award – The Government is concerned that the compensatory award for unfair dismissal has become too high; it is currently capped at £72,300. The Government are consulting on whether it should be reduced to either £25,882 (currently the lower figure of the national median average earnings) or instead to an individual's annual net salary capped at a year.
  • Further streamlining of the employment tribunal system – proposals have been announced to permit employment judges to dismiss weaker claims at an earlier stage. It is hoped this will reduce the need for pre-hearing reviews and reduce the tribunal’s workload overall.
  • “No fault dismissals” – the controversial proposals for small businesses to be able to dismiss at will, are not going ahead.
  • Can’t Pay/Won’t Pay – Next year, a new fee structure for bringing claims in the employment tribunal will be introduced. The Government will look at the fee structure to ensure there is access to justice for those who cannot afford to pay the fees.

The Government will be consulting on:
  • The introduction of settlement agreements (including the terms of a draft settlement agreement);
  • How the cap on compensation for unfair dismissal claims might be reduced. (consultation documents may be found here; and
  • Proposed changes to employment tribunals (found at
Consultation in respect of these three issues ends on 23rd November 2012.
  • There will also be consultation on how to make TUPE transfers (transfers of employees from one employer to another when a business (or part of it) is sold) – this will happen before the end of the year.
Employment law is once again under the spotlight – we will keep our readers updated on any further developments on these changes.

Jim Golby

Last updated on: 29/10/2012 11:07:47

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