Employment law reform gathers pace…
Cap on Tribunal Compensation
The Government has today published its response to the ‘Ending the Employment Relationship’ consultation. The cap on the compensatory award for unfair dismissal claims is to be set at 12 months’ pay (or the current cap of £72,300) whichever is lower. This is potentially good news for employers as it may help to manage employees’ expectations of the likely value of their claims.
The Government has also today issued a consultation on proposed changes to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”). The consultation ends on 11 April 2013. The key proposals are as follows:
- The main proposed change is to repeal the application of TUPE to “service provision changes”, under which contracting out, contracting in and retendering exercises are dealt with. It is anticipated that there will be a transition period before there is a repeal of this part of the legislation. The “standard” definition relating to transfer of an undertaking will still remain.
- The Government has also indicated that it would be prepared to amend TUPE to permit post-transfer harmonisation of terms and conditions (which currently is not permitted except in very specific cases) although noting that any such change would likely be incompatible with the Acquired Rights Directive. As such, the Government is suggesting that Regulation 4 of TUPE could be amended so that changes by reason of the transfer itself would still be prohibited, but parties would be able to agree any change that they could have agreed had there not been a transfer. Variation to terms and conditions post transfer, for an ‘economic, technical or organisational’ reason (ETO reason) entailing changes in the workforce” would still be permitted as is currently the case.
- The definition of an ETO reason is however also to be amended to ensure that changes in location are covered by the concept of “entailing changes in the workforce”.
- It is proposed that any dismissals because of the transfer would remain automatically unfair, but that dismissals which are only “connected to” the transfer may not be.
- It is further proposed that the “statutory constructive dismissal” claim under Regulation 4(9) of TUPE be narrowed.