Media Briefing Note: Coalition Announces Employment Law Review
11 May 2011
LONDON, 11 MAY 2011 - The government has today announced a review of three pieces of employment legislation that can cause problems for employers. In particular, the government highlights concerns that unlimited compensation in discrimination claims encourages speculative claims, that the need to inform and consult employees before making mass redundancies hinders efficient restructuring, and that the "TUPE" regulations that require employers to preserve employees' terms and conditions following a business transfer have been gold-plated.
Elizabeth Slattery, a partner in the employment team at Hogan Lovells, said:
"Announcing a review of these particular pieces of legislation will undoubtedly be popular with businesses. However, in practice it may be difficult for the government to make substantive changes to the law in these areas. For example, in 1993 the government had to remove a cap on discrimination compensation after a court ruling that the cap was incompatible with EU law. If the current government is considering reintroducing a limit on compensation, this will be problematic.
"The need to inform and consult in a redundancy situation is an obligation that stems from European law, so the government's freedom to make significant changes in this respect is circumscribed, although there may be some scope to clarify the specific periods over which consultation is required. In relation to the TUPE obligations, the main "gold-plating" that has taken place has been to introduce a presumption that outsourcing deals will be covered by TUPE. This was introduced following a period of uncertainty caused by conflicting European Court decisions about whether TUPE applied to outsourcings. At the time the new clarity was welcomed by employers and outsourcing providers, so removing this "gold plating" would not necessarily be as beneficial as the government suggests."
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