All work and no fair play

The Fairness at Work proposals highlight much-needed changes to working life. Mattheu Swallow asks: Just how effective will they be?

With a swathe of new, pending and proposed legislation on its way, employment law is changing rapidly. Before you have even had a chance to work out whether taking your client to Saturday's football match can be counted as working time, there are new and bigger problems to consider.

Breaking free of the shadow of the Working Time Directive and heralded as “a blueprint for change” comes the Government's consultation paper Fairness at Work.

Consultation closes at the end of October, but change is proposed on three levels: individual rights, collective rights and family friendly policies. New rights for individuals include the abolition of the cap on unfair dismissal claims and the reduction, to one year, of the qualifying period. In relation to fixed-term contracts the paper has proposed to prohibit employee waivers for unfair dismissal, but to allow it in relation to redundancy.

The most important aspect regarding collective rights is that trade union representation and recognition will be available where a majority of the workforce want it. Alongside this are developments relating to Tupe – Transfer of Undertakings (Protection of Employment) Regulations 1981 – and the extension to the UK of the European Works Council Directive.

The government White Paper explains that “this sets out sensible minimum standards for informing and consulting employees at European level, in companies or groups with more than 1,000 employees and 150 in each of at least two member states”.

Dominating the third tier is the Parental Leave Directive, originally proposed by the commission in 1983. It will allow for “three months' parental leave for men and women when they have a baby or adopt a child, plus protection from dismissal for exercising this right; and time off for urgent family reasons to help employees look after a sick child or deal with a crisis at home”.

With the reduction of the qualifying period to one year and the lifting of the cap on unfair dismissal claims, it is inevitable that there will be an upsurge in tribunal litigation.

Such a rise can only be a good thing says Michael Clarke, a partner in the employment department of Morgan Bruce in Cardiff. He argues that employment tribunals (formerly known as industrial tribunals) are “more effective at processing claims than the courts”.

James Tayler, a barrister at Devereux Chambers, feels that the best way for businesses to reduce the number of claims made against them is to implement fair and proper procedures to deal with employees. Tayler adds that the extra potential value of claims may encourage more people to seek proper legal advice, leading to a greater number of settlements.

But Sue Nickson, head of the employment unit at Hammond Suddards, thinks the floodgates are going to open no matter what companies do, leading to “a massive backlog” of tribunal work.

Malcolm Pike, partner and head of Addleshaw Booth & Co's commercial group is also cautious, warning that the type of claims faced by the tribunal could be beyond its ability. Until now, tribunals have generally been involved in hearing the claims of workers rather than executives.

Tayler disagrees, arguing that since the cap was lifted on claims relating to sex and race discrimination, the tribunals have become used to deal with potentially high claims. He suggests that panel members could undergo additional training to enable them to cope with particularly difficult problems of quantum.

He adds that lifting the cap on unfair dismissal compensation would discourage litigants from pursuing their claim on the grounds of discrimination, which often leads to more costly and lengthy tribunals.

But the cap may not be removed completely. Solicitors believe Peter Mandelson, Secretary of State at the Department of Trade and Industry, will fix it at £50,000. This would be against the wishes of the unions, which are fighting for unlimited awards. Nickson finds this paradoxical when it seems likely that only fat cats will be making claims for over £50,000.

Meanwhile, small firms have been hard-hit by the administrative burden that is the Working Time Directive. They are likely to find it hard to stomach Fairness at Work.

Prime Minister Tony Blair says the legislation is intended to “complement our proposals for encouraging small businesses”.

Tayler agrees that small firms are hindered by a lack of resources, but says most procedures are rarely complex and there is plenty of help available. For example, the Advisory Conciliation and Arbitration Service (ACAS) offers a code of practice on disciplinary procedures and the ACAS handbook for small businesses, while the Department for Education and Employment has guidebooks on almost every area of employment law.

Although the Fairness at Work paper is still at the consultation stage, problems with its interpretation are likely. Certainly, with the Working Time Directive, badly worded legislation posed more questions than it answered.

The proposals relating to unfair dismissal are likely to create difficulties in making any kind of accurate risk assessment. In a situation where a lawyer is acting for an employer facing a claim from an employee, the first thing an employer wants is an accurate assessment of the potential parameters of that claim. It will be difficult for lawyers to know where to make their pitch until there has been some litigation on the matter.

As with the Working Time Directive, some definitions are still unclear. For example, those of “worker” and “parent” need to be cleared up before the December 1999 implementation deadline for the Parental Leave Directive.

Janet Gaymer, head of employment at City-based firm Simmons & Simmons, highlighted the following additional grey areas in a recent talk to members of the Bar Association of Commerce, Finance and Industry (Bacfi):

the precise relationship between maternity, parental and family leave, for example, in relation to time of taking, length and the problems of multiple and changed employers;

the particular circumstances of annualised contracts, zero hours contracts, casual and temporary workers and job sharers;

the precise extent of childcare;

what amounts to “justifiable reasons related to the operation of the undertaking” for the purpose of postponing the granting of leave; and

the definition of family.

There are also problems as to what the practical operation of “rights of recognition” will be, and what will constitute the “relevant bargaining unit” to assess trade union recognition. Most businesses will want this to be on a site-to-site basis to take account of varying pay and conditions in different regions, while the unions are arguing for it on a national basis.

Generally the response to the principles behind Fairness at Work has been positive. David Green, a partner and head of employment at Charles Russell, is just one lawyer who is encouraged by the reduction of the qualifying period for unfair dismissal to one year. After all, he asks pointedly, “if an employer can't make up their mind about an employee by then, when will they”?

Real change though, is going to take time to materialise and although this is the most significant raft of legislation in recent times, the nature of employment law means it is going to be in a continual state of flux.

The storm before the calm seems sure to see an increase in litigation, although it will be a storm most lawyers will be more than happy to weather.