FAIRNESS
AT WORK
CHAPTER THREE
New
Rights for Individuals
3.1 Individual
employment rights are important in the Government’s approach
to competitiveness and the labour market. Fair treatment of individuals
enhances commitment and competitiveness. Flexibility and adaptability
- both crucial to competitiveness - need to be underpinned by basic
minimum standards. However, current individual rights do not wholly
reflect the modern world of work. The Government has therefore reviewed
individual rights and, in some cases, has already taken action.
3.2 The
Government has introduced legislation for a national minimum
wage below which pay should not fall. This will be a single
hourly rate for all regions, sectors and sizes of company. Together
with tax and benefit reforms, the minimum wage will help to promote
incentives for individuals to find and make the most of jobs.
It will ensure greater fairness at work and remove the worst exploitation.
It will promote competitiveness by encouraging firms to compete
on quality rather than simply on labour costs and price. The Low
Pay Commission has consulted widely and its report will propose
the rate at which the minimum wage should be set.
3.3 The
Government is also promoting individual rights by supporting Richard
Shepherd’s Private Member’s Bill on public interest
disclosure, or “whistleblowing”. This is expected
to gain Royal Assent by this summer. The Bill will provide protection
against dismissal or victimisation for employees who responsibly
raise concerns about criminal offences, failures to meet legal
obligations, miscarriages of justice, health, safety and environmental
dangers and “cover ups” of these matters. It will encourage
resolution of concerns through proper workplace procedures, but
it will protect those who, in the last resort, have to go public.
The Bill has broad support from employers and trade unions.
3.4 The
Government also supported the Employment Rights (Dispute Resolution)
Act introduced by Lord Archer of Sandwell. This Act improves
and streamlines the procedures of industrial tribunals. Industrial
tribunals should be seen as a last resort. It is better if employers
and employees can settle disputes voluntarily, between themselves
or with the assistance of a third party. The Act encourages the
use of internal procedures and promotes a new voluntary arbitration
scheme, developed by ACAS, to settle unfair dismissal claims.
This new scheme will be introduced in the spring of 1999. The
Government hopes that the voluntary arbitration alternative provided
by ACAS will create a change of culture so that individuals who
have been dismissed unfairly are more likely to get their jobs
back. The Act also extends ACAS’s conciliation role to redundancy
payments cases. By streamlining dispute resolution and encouraging
voluntary settlement, the Act should reduce the incidence and
costs of high profile, hostile disputes.
3.5 Nevertheless,
some disputes will still have to be resolved by industrial tribunals.
Tribunals must be seen to be fair to both parties. Where a tribunal
finds that individuals have been unfairly dismissed, they should
receive a proper remedy. Tribunals issue very few re-employment
orders, so the amount of compensation for unfair dismissal is
very important. Although many awards are well below the current
limit on compensation, which the Government has recently increased,
the existence of a limit prevents some individuals from being
fully compensated for their loss. The likelihood of proper compensation
being awarded should also encourage employers to put proper voluntary
systems in place. The current cap on compensation for unfair dismissal,
which has steadily fallen in real terms, provides no such incentive.
The Government therefore proposes to abolish the maximum limit
on such awards. Abolition in sex discrimination claims has
not led to a significant rise in the number of cases and although
race discrimination cases have risen, these are relatively few
in number.
3.6 The
Government is also considering whether the limits on additional
and special awards should be retained. A tribunal may grant
an additional award when an employer fails to comply with a re-employment
order. Higher special awards may be made if the dismissal was
because the employee:
- was, or
was not, a trade union member;
- had taken
certain types of action on health and safety grounds;
- had exercised
a role as the trustee of a pension fund;
- had represented,
or been a candidate to represent, other employees in a consultation
on redundancy or on the transfer of a business.
3.7 There
are minimum and maximum limits on both additional and special
awards. It is therefore possible to receive an award without having
suffered any loss. On the other hand, the upper limit may act
as a deterrent to someone exercising a legitimate role or right.
This issue has surfaced recently in the context of the Public
Interest Disclosure Bill, which is aimed at protecting “whistleblowers”.
A majority of the respondents to the consultation exercise on
this Bill, including the CBI and the TUC, took the view that there
should be no limit on compensation awarded under the Bill. The
Government’s view is that it would wish the compensation
to be in line with other employment rights. The Government has
therefore proposed that awards made under the Public Interest
Disclosure Bill should attract a higher special award as described
in paragraph 3.6. An alternative approach to special awards would
be to allow tribunals to award aggravated damages in these limited
circumstances. The Government would welcome views.
3.8 Many
of the limits on compensation awards have, by law, to be reviewed
annually. Others are reviewed at the Secretary of State’s
discretion. Reviews are time consuming, costly and produce results
which could generally have been predicted. The Government therefore
proposes to introduce legislation to index-link limits, subject
to a maximum rate. This does not apply to awards for unfair
dismissal where the Government proposes abolition of the limit.
3.9 The
period of employment before employees qualify for protection against
unfair dismissal is currently set at two years. As the economy
becomes more dynamic, leading to more frequent job changes, the
Government is concerned that this period is too long and a better
balance between competitiveness and fairness would be achieved
if it were reduced:
- employees
would be less inhibited about changing jobs and thereby losing
their protection, which should help to promote a more flexible
labour market;
- more employers
would see the case for introducing good employment practices,
which should encourage a more committed and productive workforce.
3.10 Some
employers claim that a long qualification period is needed to
allow mistakes made in recruitment to be rectified without heavy
costs. The Government accepts such mistakes happen but believes
that the present period is longer than is needed to allow them
to come to light and be dealt with. For all these reasons, and
to increase protection against arbitrary dismissal, the Government
therefore proposes to reduce the qualifying period to one year.
3.11 Over
850,000 people in the UK have contracts for a fixed term or a
fixed task, of whom some 160,000 have a contract for over 2 years.
Fixed term contracts allow employers to engage people to work
on short-term tasks or jobs which have a fixed duration. An important
aspect of the law governing such contracts is that it allows employees
to waive their rights to unfair dismissal and statutory redundancy
payments. This allows employers to take on fixed term contract
staff for specific projects without the fear of claims for unfair
dismissal or redundancy when the project is completed. However,
some employees are obliged to accept fixed term contracts and
to waive these employment rights for open-ended jobs.
3.12 The
Government has identified and considered a number of options for
tackling this problem. The main options are:
- promoting
best practice by encouraging employers to limit the use of waivers;
- restricting
the waiver to redundancy payments; or
- complete
prohibition.
3.13 The
Government does not believe that promoting best practice alone
would deter unscrupulous employers, but complete prohibition would
remove a useful flexibility for genuine employers. The Government
therefore favours prohibiting the use of waivers for unfair dismissal
but allowing them for redundancy payments. Short-term workers
know when they start work that their job will come to an end on
an agreed date and do not therefore have the same claim for redundancy
compensation when it finishes. In contrast, such employees can
reasonably expect to be as protected against unfair dismissal
as permanent employees. The Government would welcome views
on this approach and the alternatives.
3.14 Some
200,000 people in the UK work under zero hours contracts.
These contracts do not specify particular hours: the person may
be required at any or at specified times. These contracts maximise
flexibility for employers and suit some people who want occasional
earnings. Many employers ensure the contracts are used sensibly,
but they have the potential to be abused. For example, in theory,
employees could be asked to “clock off” and so lose
pay in quiet periods but without being able to leave the premises.
Being “on call” might also create difficulties in claiming
benefit, even though no work was being done or money earned.
3.15 The
Government wishes to retain the flexibility these contracts offer
business and believes that the National Minimum Wage and Working
Time Directive will provide important basic protections against
some of the potential abuses.
3.16 The
Government would welcome views on whether further action should
be taken to address the potential abuse of zero hours contracts
and, if so, how to take this forward without undermining labour
market flexibility.
3.17 The
Government wants to see flexibility in the labour market. But
it must be coupled with fairness. In the interests of both employers
and employees, greater flexibility in both working patterns and
contracts must be reflected in employment legislation.
3.18 As
a first step, the National Minimum Wage Bill is designed to ensure
that the minimum wage applies to all those who work for another
person, not just those employed under a contract of employment.
The Government will take a similar approach in implementing the
Working Time Directive. It now intends to consult on the idea
of legislation enabling it similarly to extend the coverage
of some or all existing employment rights by regulation. The
Government will consult fully on specific changes before exercising
this power. The rules governing the conduct of employment agencies
are also under review.
|
