Big incentives to get into work

Employment law may not have the kudos of other fast-developing areas of the law but as it becomes more specialised and its rapid growth is acknowledged in other parts of the profession, the role of the employment lawyer has become more important than ever.

It is not surprising that practitioners say they have never been busier. The surge in the employment law sector during the past few years is about to hit a new peak as the Government's reforming agenda is translated into legislation. It is, quips Richard Arthur, a partner at London firm Thompsons, “a subject with a definite steroid problem,” and the boom is showing no signs of abatement.

So rapid is this growth that Eversheds partner Elaine Aarons believes the sector faces a shortage of skilled professionals and questions whether firms will have the resources to tackle the increased caseloads.

Much of the increase in work is inevitable. A profusion of new legislation now governs the relationship between employer and employee and the working environment. “In the past year alone there have been 10 or eleven major pieces of legislation which have had a significant impact on the employment scene,” says Lewis Silkin partner Michael Burd.

The legislation – a steady flow of European Union directives to improve the lot of workers alongside a raft of UK laws – not only results in a more regulated working environment, it also increases employers' need for legal advice as they attempt to prepare for the changes coming on-stream and tighten up their internal procedures that handle personnel matters. The stakes, too, have been raised – getting it wrong can seriously dent the company coffers.

In many instances the term “employee” has been replaced by “worker”, greatly increasing the scope of the law. Coupled with society's growing enthusiasm for litigation, this is leading to ever greater numbers of people looking to exercise their rights through the courts. “There is a greater awareness of and willingness on the part of employees to test their rights, particularly as walking into another job is not always so easy,” believes Nicholas Robertson, a partner at Rowe & Maw.

In parallel with legislative change, UK case law continues to develop and there are regular challenges to current legislation. The most significant factor (and one that has created the most work for employment lawyers) has been the implementation of European-driven legislation and its judicial interpretation.

The Blair Government may have embraced European legislation far more readily than its Tory predecessor, but some argue that it has not provided any clarity alongside the changes. And its elevation of the spirit of European legislation above the letter of the law has left key concepts to be interpreted by the courts and tribunals and some lawyers argue that this merely continues the uncertainty of Europe that was a feature of the last government.

This may be a source of consternation for judges, and has left employment lawyers scratching heads, but it is also means more work. “More than they used to, employment lawyers are having to divine what the Government's intention is in order to give cutting edge advice to clients,” says Janet Gaymer, head of employment law at Simmons & Simmons.

The Employment Relations Bill, when it hits the statute books this summer, will be largely responsible for the explosion in work for employment lawyers. Although the Department of Trade and Industry has yet to publish the regulations, this legislation is expected to bring about the most important changes to the employment arena in the last decade. The maximum compensatory award in an unfair dismissal claim leaps from £12,000 to £50,000 and the qualifying period is slashed from two years to one (see feature page 29).

Increased compensation is likely to put a stop to the cavalier attitude that some companies have to unfair dismissal claims and lawyers say many will be forced to rethink their procedures. “There will be very many more claims and the average of the awards in the past will be no guide to the future,” claims Eversheds' Aarons. “This increase is causing employers to sit up and listen and improve their procedures,” she adds.

Freshfields employment partner Nick Squires agrees and predicts that these changes, plus raised expectations among employees, will be the main factors that drive the hike in claims all employment practitioners expect.

But it is not only the rights of single employees that have received a boost – legislation will also put emphasis on collective rights. Margaret Thatcher largely succeeded in her push to wrest power from unions in the mid-1980s, and many believed she silenced them for good. However, the Employment Relations Bill rules that if 50 per cent of employees in a workplace vote in favour of joining a trade union, the union voice will be heard once more – a piece of statute widely hailed as the most democratic the Government has implemented. Many solicitors are predicting this to be one of the main growth areas within employment law in coming years and a great source of work.

Other pieces of legislation that are giving employers something to think about and will keep lawyers busy include: the Public Interest Disclosure Act 1998 – the whistleblower legislation; the Data Protection Act; the proposed Works Councils and the Human Rights Act, which will open to challenge the system of precedent. Last year's Working Time Regulations also proved a fertile ground for lawyers and, as the first actions drip through, the volume of related cases will increase.

Discrimination is another area that will keep all lawyers occupied. The sex discrimination claim that Josephine Hayes made against the Lord Chancellor, Lord Irvine, for appointing his friend Philip Sales as first treasury counsel is just one of many discrimination cases that hit the headlines last year and with the scope of the Disability Discrimination Act 1995 now being felt, this is an area that will continue to provide challenging work for employment lawyers. The TUPE [Transfer of Undertakings Protection of Employment] regulations of 1981 are also still a highly active area that has kept legal minds occupied and warranted some substantial payouts.

And there are other developments on the horizon. Peter Frost, a partner at Herbert Smith, points to employee leasing arrangements – which are becoming popular in the US – as a growth area and expects them to become a regular source of work.

All of which is good news for employment practitioners. The sector's law has become so complicated and clients now demand legal work be done at such a pace, that lawyers can no longer play at employment law. “One or two major firms still have people who dabble but that is becoming increasingly impossible,” says Ian Hunter, partner at Bird & Bird.

So while every law firm now requires at least one employee who knows something of employment law, most recognise that some work must be referred to specialist firms.

But what of those firms? Many now recognise the sector's profitability and are pushing to exploit the UK marketplace but observers comment that US firms have yet to make their mark. However, the poaching of choice, high-profile partners or departments may change this. Baker & McKenzie recently lost employment law guru Fraser Younson to McDermott Will & Emery. Younson says his move shows employment law is being taken seriously as a subject. He adds that such is its strategic importance, firms cannot offer a full-service to clients without employment expertise. And a number of recruitment adverts for employment lawyers suggests at least one other US firm has this in its game plan. The market can cope with such competition. What it will lead to is anyone's guess.

But the strength of the team is as crucial as the stars it supports. Employment law is becoming an increasingly popular subject for trainees, who view it as a sector full of opportunity, and although most of the serious players are recruiting, a shortage of experienced two to four-year qualifieds may pose a serious problem as caseloads increase.

Anyone seeking proof of the growing status of the employment sector could turn to the growth of the Employment Lawyers Association (ELA). Formed in 1992, the body now boasts over 1,000 members and its voice is respected in legal and lay circles alike. Perhaps more important, however, is its lobbying role, which has allowed lawyers to have their say on how the law in this area develops. And the challenge for all in the field is to keep on top of the rapid changes so they can understand and interpret developments and provide practical advice for clients. Indeed dedicated, niche practitioners and consultants are increasingly being employed to keep larger firms abreast of developments and Stephen Levinson, a partner at Paisner & Co, suggests growing complexity may force specialisation within the employment sector.

Regardless of employment law's future development, one certainty remains and that is it will not be quiet. As one issue is resolved another waits to be decided, and the movement towards greater employee rights will ensure this momentum continues. “We will all be very busy,” confirms Beachcroft Wansbroughs partner Rachel Dinley. As for the future, she has one request: “I hope it will not be quite the pace it has been this year.”