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Law – the good, the bad and the baffling

Coping with new employment law is part and parcel of running a business. But do these new laws benefit either employer or employee? Here, Kelly Sayers, Partner and Head of Employment Services at law firm Prettys, discusses the issue and looks at whether, in an ever demanding commercial world, businesses can realistically be expected to stay on top of the multitude of changes which occur.

Statute based employment law in this country has been shaped over the years by government domestic policy and the influence of European law. The message in relation to the former has been that change is a change for the best. Experience shows us that this is not always the case. Take the ill-fated Employment Act 2002 and related Dispute Resolution Regulations of 2004, which addressed disciplinary, dismissal and grievance procedures and introduced the idea of compensation adjustment for those (be they employers or employees) who did not comply. The intention was to resolve disputes ‘in house’ without troubling the overburdened employment tribunal system. However, the new regime had the opposite effect and resulted in considerable ‘satellite’ litigation over seemingly bizarre matters. For example, should a ‘without prejudice’ letter written by an employee’s solicitor or notes of an employee meeting taken by a line manager be considered as the employee setting out a grievance in writing and thus constituting the first step in the statutory Grievance Procedure?

Fortunately, that experience is behind us. The legislation has now been succeeded by the ACAS Code of Practice of April 2009. Although this is still built around a concept of compensation adjustment where there has been ‘an unreasonable failure’ by employer or employee to follow the guidance set out in the Code, so far there has not been the same raft of satellite litigation as under the previous regime. It remains to be seen whether case law will define what actually amounts to ‘an unreasonable failure’. We can also look at the Equality Act 2010 which aims to consolidate the many different strands of discrimination law. However, it came as a surprise when it was discovered that the Act appeared to cast doubt as to whether discrimination claims could be validly waived by way of Compromise Agreements. It has taken about 18 months (and conflicting opinions from two leading employment QC’s) for the issue to be resolved by way of an Amendment Order.

Then there’s the increase from one to two years in the qualifying period for the right not to be unfairly dismissed which is designed to stimulate business growth and recruitment. Will it really make any difference? It has been argued that a one year qualifying period is not really that off- putting to employers and could be irrelevant as other employment rights (discrimination and certain unfair dismissal claims) are not dependent on a qualifying period of employment. Besides which, the last time there was a two-year qualifying period it was subject to a legal challenge on the basis that it was indirectly discriminatory to women (Seymour-Smith) owing to the often fragmented nature of their employment. There has been speculation that a similar challenge may be brought this time round, although possibly relying on a different strand of discrimination. Were a challenge to be mounted, successfully or not, it is unlikely that business growth or recruitment would be stimulated.

For employers, coping with the numerous changes to employment law can be challenging. Inevitably there will be some who find it difficult to comply and some who just scrape by. Whilst large companies are likely to have greater resources to cope with changing employment legislation than smaller businesses, they also tend to have bigger workforces. This may lead to a larger number and more intricate issues needing to be addressed, potentially with further reaching consequences for the business. Additionally, large organisations are often given less time to comply than their smaller counterparts.

New employment legislation tends to take effect in April and October each year which does provide a helpful structure and timetable. There is also a wealth of timely case law updates available on the internet. The familiar practice of new legislation being supplemented by departmental guidance is also a useful reference point, although critics might say that it just adds to the volume of material to be absorbed by employers. In any case, it is worth noting that such guidance, although persuasive, is not a conclusive interpretation of legislation – ultimately that is a task for Tribunals and Courts. It is doubtful that the situation will get any easier in the future. While the Government has talked about cutting through red tape, ending the ‘goldplating’ of European Directives and creating small employer exemptions, there is unlikely to be wholesale deregulation of the employment relationship. It is the constantly evolving way work is carried out (remotely, via social media, etc) that will shape the future development of employment law, although the more established drivers of economics and politics will continue to play their part.

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