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Autumn Statement: chancellor admits employment rules need reform


The chancellor George Osborne has pledged once again to reform employment rules saying the Government is "committed to fair rights for employees" but that businesses have the right "not to be sued out of existence".

Speaking this afternoon, he said: "Planning laws need reform. So too do employment rules.

"We know many firms are afraid to hire new staff because of their fear about the costs involved if it doesn't work out.

"We're already doubling the period before an employee can bring an unfair dismissal claim and introducing fees for tribunals.

"Now we will call for evidence on further reforms to make it easier to hire people, including changing the TUPE regulations; reducing delay and uncertainty in the collective redundancy process; and introducing the idea of compensated no fault dismissal for businesses with fewer than ten employees.

"We will cut the burden of health and safety rules on small firms - because we have a regard for the health and safety of the British economy too.

"This Government has introduced flexible working practices and we are committed to fair rights for employees.

"But what about the right to get a job in the first place? Or the right to work all hours running a small business and not be sued out of existence by the costs of an employment tribunal?"

Tim Marshall, partner, employment at DLA Piper, said: "The Government is placing a heavy focus on employment law reform and most of its intentions were announced last week as a "good news story" in Vince Cable's speech to the EEF. At face value, the Government's proposals seem to provide good news for employers but the reality may, in fact, prove to be different. Although most employers will welcome the push to lessen regulation in the employment law arena, the proposed changes are unlikely to help those employers who may now be assessing their workforce needs in view of the current bleak economic outlook.

"The Government's call for evidence on the redundancy consultation rules will close on 31 January 2012 and they will then use the evidence gathered to formulate policy proposals that will be put forward for public consultation during 2012. It seems unlikely, therefore, that any reform to collective redundancy consultation obligations would take effect before April 2013 at the earliest. This will be too late for employers who have to made redundancies early next year.

"Another aspect which employers need to be aware of is that some of the Government's deregulation proposals are likely to be challenged when they come into effect and may, therefore, be unsafe for employers to rely on. For example, it is likely that there will be a Trade Union challenge to the increase in the qualifying period for unfair dismissal from one to two year (which is to come into effect in April 2012) on the grounds that this is discriminatory on grounds of age and sex.

"This change may lead to greater uncertainty and risk of litigation for employers than exists with the current one year qualifying period."