The Beecroft Report and Employment Legislative Reform

Business Secretary, Vince Cable, said this week, after publication of the Beecroft Report that the Government has “always been clear that sensible and well thought-through reforms need a strong evidence base behind them, not just anecdotal experiencesOne of Mr Beecroft’s recommendations was a suggestion to bring in no-fault dismissal.  In my daily conversations with businesses, this has very rarely been raised with me as a barrier to growthBusinesses are much more concerned about access to finance or weak demand than they are about this issue”. 

Mr Cable is therefore saying that before introducing legislative changes the Government wants hard evidence for the benefits of any reforms but in the same breath talks about his own daily conversations with businesses, which can only be anecdotal.  

Whether as a result of empirical evidence or anecdote, the Government clearly sees a need for reform in the area of employment as a way of stimulating economic growth and a draft of The Enterprise and Regulatory Reform Bill was yesterday put before parliament.  There are mixed views as to whether the Bill will have any real impact on the economy but one particular aspect of the Bill which is likely to be of keen interest to business is the possible reduction on the cap on compensatory awards for unfair dismissal which currently stands at £72,300.  However, given the fact that the majority of awards made by tribunals in unfair dismissal claims tend to be limited to 12 months’ future loss of earnings and the median earnings for employees in 2010 were £20,800, in real terms, most claims are not worth anywhere near the statutory cap in any event.  

In addition to the likely reduction to the cap on the compensatory award for unfair dismissal, the Bill provides for:

 A mandatory period of Acas conciliation before proceedings can be issued

  • Extension of limitation periods to allow for that conciliation
  • Introduction of ‘legal officers’ to make decisions in certain cases if all parties agree in writing
  • EAT cases to be heard by a judge alone, unless ordered otherwise
  • Power for a tribunal to impose a penalty on employers of 50% of any financial award, subject to a minimum of £100 and a maximum of £5,000 where there are “aggravating features” (not defined), with a 50% discount for payment within 21 days
  • Definition of ‘qualifying disclosure’ in whistle-blowing legislation to be restricted to disclosures “in the public interest” (not defined)
  • ‘compromise agreements’ to be renamed ‘settlement agreements’

 I would be interested to hear from any business owners on their views of these reforms.



About Belinda Lester
I am the managing director and founder of Lionshead Law, a boutique virtual law firm specialising in employment, immigration, commercial and IP law.

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