All change again for Employment Law


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Employment law is becoming more complicated. There is no doubt about it, just as you thought you knew where you stood the landscape moves and you are left, blinking and bewildered in the glare of the employment rights headlights. Ironic that it’s all happening in the name of simplification. Where will it all end.

I am often referred to as “wittering on” about how employers are too frightened to move, and how they should grow a backbone and start doing what’s best for their business, in the interests of themselves and their employees. (For the record I have never suggested employers have a lack of backbone). However, things are becoming a little easier for employers, although this may only be a short term thing.

This year we see life getting decidedly tougher for the disgruntled employee. New tribunal claims will require a fee to be paid (unless the employee is short of cash) and employees now need two years’ service before they can claim unfair dismissal (unless there are other factors at play). Settlement agreements are being introduced. While my view is that these are little more than the emperor’s new clothes, an acknowledgement that employers want the ability to have a chat with employees about removing their livelihood without any comebacks.

One change is a tax advantage potentially, masquerading as an employment law change. This is the introduction of the new Employee Shareholder contracts. These can be offered to staff and mean that the staff can be given between £2,000 and £50,000 in shares, without paying capital gains tax on any disposal. In exchange, the employee who takes the shares cannot then claim unfair dismissal in the future. Taken at face value, the employer will simply be swapping potential and possibly non-existent arguments about dismissal in the future, for potential arguments about the value of shares. The latter argument being the more expensive. In fact, now I come to think about it, the number of employers who will want to give away this sort of value to each employee to avoid claims that may never arise is going to be pretty small. However, as a way of getting value out of a company between, say, spouses, this new contract is very useful indeed. There will be certain legal formalities that will need to be observed but on the whole, an attractive proposition in some circumstances.

None of this seems to fit with the drive to introduce employment rights in other areas. For example, Limited Liability Partnerships (LLP’s) have always been subject to a presumption that members of the LLP are not employees. That will now change, and the facts of the relationship between the members will determine whether LLP members will be employees. In short, if they don’t run the company, they are likely to be employees.

In line with the law of “action and reaction”, what is happening to balance this reduction in employment rights? Well figures released at the end of May by BIS reveal that the number of people in trade unions has grown in the last 12 months for the first time in 5 years. In fact, in the last 12 months trade union membership in the UK has risen by 59,000 to a total of 6.5 million people. Hardly the population of China, but you wouldn’t want them all in the tea room at the same time. What is more surprising is that 2.5 million of these trade union members are in the private sector.

So it would seem that as employment law becomes more complicated and employees feel less protected by law, then they seek solace in the arms of another and the UK’s employers may need to become reacquainted with the subtleties of an employment relations love triangle.

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