22 Jun 2012

Employment Law Reforms

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This past week has seen the Government announce plans for a number of employment law reforms:

Consultation on redundancies

These proposals are aimed at “improving the ability of companies to respond to changing economic conditions” and “improving the quality of the collective redundancies process”.

A formal consultation document has been published which seeks views on a number of proposals including:

  • introducing a non-statutory code of practice to provide clearer information on how to conduct good quality consultations;
  • reducing the 90-day minimum period for collective redundancies of more than 100 staff to 45 or 30 days; and
  • improving the guidance for employers and employees on the support on offer from the Government.

Protected conversations

The Government has tabled an amendment to the Enterprise and Regulatory Reform Bill, with regard to its proposals for “protected conversations”.

It is now intended that an employment tribunal would not be able to take into account “any offer made or discussions held, before the termination of the employment in question, with a view to it being terminated on terms agreed between the employer and the employee”. The arrangement would only apply to a claim for unfair dismissal and not to discrimination claims or other complaints.

If, however, something “improper” arises in the discussion, the proposals would allow the tribunal to take the discussion into account.

Shareholders to be given ‘binding votes’ on executive pay

It is intended to give shareholders “binding votes” on executive pay and exit payments. Companies will need the support of the majority of shareholders to be able to action their pay plans for directors and they will be subject to binding shareholder votes annually – or every three years, if the policy remains unchanged.

Policies setting out the approach to exit payments for directors will also be subject to a binding shareholder vote.

Further details as well as comment and guidance will be provided in our Summer Employment Briefing.

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Director MCM

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