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Written Ministerial Statements

Friday 14 September 2012

Business, Innovation and Skills

Employment Law Review

The Secretary of State for Business, Innovation and Skills (Vince Cable): The coalition Government made a commitment to review employment legislation to ensure it provides the flexibility for employers without compromising fairness for employees. We have reported to Parliament at various points during the course of the employment law review and the employment-related law red tape challenge, the steps we are taking to reform UK employment legislation.

The Government have already taken significant steps in reforming employment law including extending the period for eligibility for unfair dismissal from one to two years, streamlining employment tribunals, creating a universally portable Criminal Records Bureau check and removing the default retirement age.

We are today taking a number of further steps which will lead to further changes and reforms that will help reduce burdens on, and increase certainty for, businesses, especially small businesses. We are seeking to address both the perception and the realities of the burden of employment legislation through the employment law review, and are implementing a strong package of reforms. The set of measures which we are announcing today respond to business concerns that we need to do more to help them tackle issues at the end of the employment life cycle. Building on work that has already been implemented, such as the doubling of the qualifying period for unfair dismissal from one year to two years, we are now seeking to put in place a range of further measures to help businesses to effectively deal with dismissal, which will:

Create certainty about employers’ liabilities;

Provide clarity on dismissal and tribunal processes;

Give business confidence to use settlement agreements to end employment relationships where this is necessary thereby avoiding the tribunal process completely.

These measures will reduce risks to employers, increase their flexibility to deal with workplace issues and decrease the costs of resolving disputes. Business will have the support to resolve workplace disputes earlier and, if they proceed to employment tribunal, they will experience a quicker, more efficient process.

Publishing a consultation (“Ending the Employment Relationship”) to support the use of settlement agreements and reduce the unfair dismissal compensation cap.

We are already taking a power in the Enterprise and Regulatory Reform (ERR) Bill to facilitate the greater use of settlement agreements, and to amend the cap on unfair dismissal awards. This consultation will seek views on the principles underpinning the use of settlement agreements, guidance on their use and model documents for use by employers.

The consultation will also propose reducing the unfair dismissal compensation cap, including the option of a cap of 12 months’ pay alongside an upper limit. This

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maximum level rose significantly under the previous Administration. Our proposed changes will give business certainty about the maximum possible liability in respect of an individual unfair dismissal claim (for example, someone who is paid £20,000 cannot be awarded more than £20,000).

Publishing the Government response to the call for evidence on dismissal and the idea of compensated no-fault dismissal.

Following analysis of the submissions and of international dismissal regulations, we have decided that we will not be pursuing the idea of compensated no-fault dismissal.

There were more than 250 responses to the call for evidence. The majority of respondents did not support no-fault dismissal and fewer than 40% of employers thought that it would be beneficial to business. Concerns were raised about the potential negative consequences of the proposal, including the potential for it to damage employee morale (which in turn could decrease productivity) and the risk that micro-businesses would find it more difficult to recruit. Furthermore, no-fault dismissal would not protect an employer from discrimination claims and so would not secure peace of mind.

In contrast, respondents were almost universally positive towards settlement agreements, as this tool settles all claims giving employers confidence to resolve problems quickly.

The issue of no-fault dismissal has been subject to much debate in the press over recent months. Officials have examined the responses carefully, alongside assessing international comparisons, and summarised the feedback and our analysis in the Government response. The Government have considered, or are already taking forward, the majority of proposals from Adrian Beecroft’s report on employment law, published earlier this year.

The call for evidence also considered the ACAS code of practice on discipline and grievance. A number of issues were raised and we will work with ACAS to ensure these are addressed. In particular, there is a need to make the code more accessible to small business and clarify how their size and resources should be taken into account. This includes making it clear that small businesses can move straight to a final warning if an issue is having a serious impact on their business. The Government are amending the Business Link guidance to more accurately reflect the contents of the ACAS code and guidance. The revised guidance will be published shortly.

Publishing a consultation on the recommendations following the “Fundamental Review of Employment Tribunal Rules” by Mr Justice Underhill.

Mr Justice Underhill has made a number of recommendations to simplify and streamline the employment tribunals system. We are today launching a 10-week consultation. That would allow us to implement changes to the rules through secondary legislation next year.

In addition to the consultation we will be introducing amendments to the Enterprise and Regulatory Reform Bill to implement three of the additional recommended changes to primary legislation identified by Mr Justice Underhill.

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Publishing the Government’s response to the call for evidence on TUPE, and commitment to consult on potential changes.

The call for evidence closed earlier this year, and we have completed our analysis of the responses. These broadly reflect a number of common concerns from business and business organisations, for example that:

employee liability information should be provided by the transferring organisation earlier than 14 days before transfer;

there is no provision for the post-transfer harmonisation of terms and conditions of employment with existing employees;

the regulations gold-plate the acquired rights directive by including service provision changes in the scope;

pensions are a concern in transfer situations for various reasons. (Pensions legislation is being reviewed separately under the red tape challenge).

We will be publishing the Government response to the call for evidence and signalling our intention to consult on potential changes. We will be developing proposals for a consultation later in the autumn.

Also in line with the introduction of employment tribunal fees next year, the Government will extend the current HM Courts and Tribunals Service system to protect access to justice for those who cannot afford to pay the fee. Given the concerns raised by business respondents to the employment tribunal fees consultation, such as whether to take into account access to savings and capital, the Government will undertake a review of remissions as part of a wider review required for the introduction of universal credit. The review will aim to produce a single remissions system for courts and tribunals which is simpler to use, more cost-efficient and better targeted at those who can afford to pay fees do so, while continuing to provide access to the courts and tribunal system to those who cannot.

Reducing Audit Requirements (Update)

The Secretary of State for Business, Innovation and Skills (Vince Cable): On Thursday 6 September 2012 I laid a written statement before the House—Official Report, column 27WS—about the publication that day of the Government’s response to the October 2011 consultation on audit exemptions and change of accounting framework.

That statement included an explanation that the legislative changes to enable companies to take advantage of the new and increased audit exemptions would come into force from 1 October 2012, to be available for accounting years beginning on or after that date.

Regulations have now been made introducing those legislative changes. However, in fact the exemptions will be available for accounting years ending on or after 1 October 2012. The regulations are the Companies and Limited Liability Partnerships (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012 (SI 2012 No. 2301).


Unsolicited Mail Campaign

The Minister of State, Ministry of Defence (Mr Mark Francois): I wish to inform the House about the annual unsolicited mail campaign the Ministry of Defence (MOD) will be running in the lead up to Christmas (which is 100 days from this Sunday).

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This Government are dedicated to the care and welfare of the men and women of our armed forces, particularly those deployed on operations, which is reflected in the comprehensive deployed welfare package. A key part of that package is ensuring the timely delivery of free personal mail from family and friends. While unsolicited mail is well-intentioned, mail sent by families and friends is the most important to deployed personnel and is our absolute priority. Moreover, unsolicited mail sometimes strains the logistic supply chain and can prevent other mail from families from getting through. The British Forces’ Post Office (BFPO) estimates it will handle approximately 22,500 parcels per week during the eight-week period between mid-October and mid-December, more than twice the normal demand. This can impact on personal mail, causing severe delays. Also delivering packages over the “final mile” to forward bases puts increased pressure on essential in-theatre resources.

It is for these reasons that the MOD will be repeating its unsolicited mail campaign. Its success last year reduced the volume of unsolicited mail by half compared to previous years. Key to the success of this campaign is encouraging the British public to show their support through one of the recognised MOD service charities. All service personnel on operations over Christmas will receive a seasonal gift box from the charity, “uk4u Thanks!”. This charity works closely with the MOD, using free space in the existing supply chain to deliver the boxes well before Christmas, without impacting on the normal mail system.

I recognise that it might seem counter-intuitive to ask the British public not to send parcels to troops at Christmas, but to avoid the impact of unsolicited mail and to help prioritise mail to service personnel from their families I ask for your full support in directing the public towards MOD recognised charities.

Foreign and Commonwealth Office

European Stability Mechanism and German Constitutional Court Ruling

The Minister for Europe (Mr David Lidington): On 12 September the German constitutional court announced its decision not to grant temporary injunctions relating to the proposed ratification in Germany of the European stability mechanism (ESM) treaty, the fiscal compact and the decision amending article 136 of the treaty on the functioning of the European Union (TFEU). We welcome the court’s decision which will allow the German Government to proceed with its ratification of the ESM treaty and the article 136 amendment decision.

The court added caveats to its decision: first that the Bundestag must be fully involved in the relevant decisions and give formal approval to use of the ESM; secondly that there should be a ceiling for German liability of €190 million and that this cannot be increased without the Bundestag’s approval; and thirdly that the requirement of professional secrecy imposed on the members of the ESM should not prevent the Bundestag from being kept fully informed on ESM decision-making processes.

During the Committee stage of the EU (Approval of Treaty Amendment Decision) Bill I referenced the anticipated 12 September German constitutional court

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decision, stating that it related only to whether the ESM treaty and the fiscal compact are compatible with the German constitution—10 September 2012,

Official Report

, column 63—to clarify this, the ruling was in relation to six separate cases brought before the constitutional court. These cases were directed primarily against the ESM, which, it was contended, would among other things jeopardise the constitutionally guaranteed right of the Bundestag to control the budget and the use of taxpayers’ money, and would turn a stability union into a transfer union. They also dealt with the fiscal compact and, in two of the cases, the decision amending article 136 TFEU to which the constitutional court gave the go-ahead to ratification without conditions.

The Government’s position on the ESM remains. The ESM alone will not solve the eurozone crisis, but will play an important role, providing the eurozone with a permanent financial assistance mechanism to assist eurozone member states in financial difficulty. And financial stability in the eurozone is crucial to our own economic recovery in the UK.


Judicial Diversity Taskforce (Progress Report)

The Lord Chancellor and Secretary of State for Justice (Chris Grayling): The judicial diversity taskforce has today published its second report, which outlines the progress achieved over the last year in driving forward change in this area.

In 2010, the advisory panel on judicial diversity made a number of recommendations aimed at increasing the diversity of the judiciary and legal professions, in response

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to concerns that the judiciary did not reflect the make-up of society. The judicial diversity taskforce, comprising the Ministry of Justice, senior members of the judiciary, the Judicial Appointments Commission (JAC), the Bar Council, the Law Society and Chartered Institute of Legal Executives, was set up to take those recommendations forward.

Significant progress has been made by members of the taskforce, having already completed 20 of the 53 recommendations. The taskforce’s recent achievements include:

Sharing diversity data and using it to develop a baseline against which to measure progress in increasing diversity;

Opportunities for judicial office being more widely promoted to eligible members of the legal profession, and applicants being offered more robust support throughout the process;

Innovative outreach activities being held to help dispel the myths surrounding the appointments process; and

Proposals being included in the Crime and Courts Bill to introduce flexible working patterns into the senior courts, and enabling the JAC to appoint a candidate from an under-represented group when two candidates are equal on merit.

Even though we are making good progress, all members of the taskforce recognise that there is still a lot of work to be done and we must not lose this momentum. We will continue to work together to implement the remainder of the recommendations and provide strong leadership so that we start to see real change in this area.

Copies of the progress report have been placed in the Libraries of both Houses.

The document is also available online, at: