There has been a lot of media coverage recently concerning proposed changes in UK employment laws. If you are unsure what these changes are about or what they will mean to you and your business, then you are reading the right article.
Vince Cable, the Business Secretary is the force behind the changes. The purpose of which, is to offer an easier process for small businesses to dismiss members of staff who are not performing in line with expectations. This process will be known as Settlement Agreements (SA), and they will replace the existing Compromise Agreements.
The goal of the SA is to help small businesses and boost employment, whereby companies should consider the recruitment of new members of staff as less of a risk. Under the changes, businesses will be able to agree the departure of under-performing members of staff without needing to worry about claims for unfair dismissal.
The SA is thought to be particularly advantageous to small businesses, as it gives a less-formal process in order to resolve employment issues, which is particularly beneficial for those who do not have the luxury of an HR department.
According to Vince Cable, the changes also represent good news for employees and says that the “The use of settlement agreements is a win-win situation for employers and employees”. The benefit for employees is that they will leave with a cash payment and a reference without the stress of a tribunal.
On the surface of things, this sounds like a positive move for all, but as with all things legal, the devil is usually in the detail. The Advisory Conciliation and Arbitration Service (ACAS), will provide a code of practice for the content behind the SA and are currently working on the detail.
This will be developed as part of a consultation process, and will also aim to improve guidance for small businesses on the ACAS code of practice. In order to avoid future issues, it is going to be very difficult for the SA to be based on a simple template.
The current Compromise Agreement system has a number of complexities that have been added by legal representatives in order to protect the employees they represent. The fact that they have been added out of necessity, means that it will be difficult for the SA to be based on a simple template.
We will have to wait and see what the agreements will look like, but the waiting time will not be too long. The changes are due to be implemented in June 2013. So good news on the whole, as the ultimate expectation is for the SA to provide a simpler process for straight forward performance-based dismissals.