24 / 04 / 2017
At the forefront of everyone’s mind, Wedlake Bell’s head of employment Adam Grant notes, is leaving the EU and what it will mean for workers across the divide.
‘We’ve got clients in financial services and hospitality,’ he says. ‘They’re suddenly panicked – 75% of their workforce are non-UK nationals. What happens if these employees are forced to leave the UK?
‘I don’t think that will necessarily happen. I’m sure there’ll be some deal put in place, but where they’ve got rights, people are rushing [to make] applications for residency because they just don’t know what’s coming.
‘Even though it’s not the job of employers to keep people in the UK, they’re looking at the wider impact on the business. So they’re lending a hand and trying to facilitate advice for their staff.’
‘We’re seeing many organisations trying to do what they can,’ Lewis Silkin partner Karen Baxter confirms, ‘particularly where key senior executives are EU nationals.’
These clients want to know ‘what we can do now to make sure that it’s not an issue – no matter what happens down the road’. Her firm has an immigration team within the employment practice: ‘They are flat out – auditing companies, particularly at the executive level, to see where citizenship applications could be made.’
One complication, Baxter adds, is that ‘EU citizens have been so used to freedom of movement, they’ve not kept the records needed in order to establish they haven’t been, [for example], out of the country for a certain number of days; that they’ve had comprehensive medical insurance; and that they haven’t any gaps in employment history’.
As to the future of employment law itself, Stewarts Law partner Richard Nicolle points to a ‘huge amount of uncertainty’ about rights.
All eyes are on the government, he says: ‘Theresa May has said we want to protect workers’ rights, [and that] there’s going to be a minimum, indeed maybe additional, protection.
‘But you have to look at the very strong influence of the “hard Brexiteers” in the cabinet. They would relish a move to a low-tax, low-regulated economic model where workers’ rights probably wouldn’t be sacrosanct.’
Nicolle believes there is ‘every prospect’ of negotiations going badly for the UK. In that event, policymakers will ask what alternatives exist for the UK to remain competitive.
One of them could be a race to the bottom on rights.
A huge number of jobs are going to be lost as a direct result of Brexit. The most conservative estimate is that 250,000 will go. Many will be in the City and big financial institutions are making plans to shift people outside the UK
— Ronnie Fox, Fox
Ronnie Fox, principal and founder of City employment law firm Fox, observes: ‘A huge number of jobs are going to be lost as a direct result of Brexit. The most conservative estimate is that 250,000 will go. Many will be in the City and big financial institutions are making plans to shift people outside the UK.
‘Part of the reaction will be an attempt to make it more attractive to employ people by reducing regulation.’
But will making it even easier to ‘hire and fire’ actually make much difference to investors? Alan O’Rourke, corporate counsel at AOL, is sceptical: ‘I’ve worked for US employers for 12 years. I can honestly say the UK is perceived as a highly flexible, highly sophisticated labour market compared with almost any other country. It’s easier to hire here; it’s easier to manage people; it’s easier to restructure. It’s also easier and cheaper to make terminations than [in] almost any one of our nearest neighbours.’
Of course, the employment law landscape is already undergoing controversial change with the explosion of the ‘gig economy’.
As Winckworth Sherwood associate Timothy Goodwin acknowledges, more people are working in casual and/or precarious jobs. ‘I’m not sure that’s what people want,’ he argues. ‘People see the advantages in it, in terms of flexibility, but when push comes to shove they want to be able to take time off and still be able to pay their bills. They want to be able to be sick and still pay the mortgage.’
A government-sponsored review of the rights of self-employed and gig-economy workers is currently under way, headed by Matthew Taylor, Tony Blair’s former policy chief. Taylor has his work cut out, as Goodwin acknowledges: ‘How are we going to [accommodate] a far more flexible model of employment, while ensuring people are protected?’
Fox is more upbeat: ‘To an increasing extent, the vibrancy of the British economy will depend on people being encouraged, in terms of tax, national insurance and so on, to set up and run their own businesses.
‘It will be in the national interest to encourage self-employment. I think tax incentives will become more pressing after Brexit. A great many people will be much happier in control of their own economic activity – and being their own bosses rather than employees.’
Unison solicitor Shantha David, who also ranks among the sceptics, highlights the plight of union members who work for private companies providing public services. ‘Quite often,’ she says, ‘these job roles are foisted upon them because there is no other option. As a union, we have a large number of care workers paid the national minimum wage who struggle to survive on that wage – and struggle to work in a sector where their [expected] hours can be removed. If they’re sick, then they don’t get paid and they can’t make ends meet.’
Cost of cases
We have a large number of care workers paid the national minimum wage who struggle to survive on that wage – and struggle to work in a sector where their [expected] hours can be removed
— Shantha David, Unison
Meanwhile, life is not getting any easier for employees who might seek to enforce an existing right. Tribunal fees and changes to the ‘qualifying period’ (the time an employee needs to have worked in order to bring a claim) are formidable obstacles.
When the coalition government proposed these changes, they were justified as lifting the ‘burden’ placed on employers by spurious claims. And there has been a dramatic and sustained reduction – from 55,000 (received, disposed or outstanding) in 2012 to around 17,000 in subsequent years.
‘I’ve never really felt that introducing fees or extending the qualifying period to two years were about cutting red tape,’ Goodwin says. ‘Look at the comments that ministers were making at the time, which were very much directed at [reducing] the number of employment tribunal cases.
‘The implicit suggestion was that, if you make it harder for people to bring claims, those people with bogus or “have-a-go” claims will stop. My experience is that people who are hell-bent on terrible claims bring them anyway.’
Unison’s David concurs: ‘The statistics bear this out, because success rates have fallen. At its peak, they were about 13%-14%. They’re now hovering at about 4%. We would have expected success rates to go up if all these vexatious claimants [had been deterred].’
Clients in financial services and hospitality are suddenly panicked – 75% of their workforce are non-UK nationals. What happens if these employees are forced to leave the UK?
– Adam Grant, Wedlake Bell
The tribunal reforms ‘missed a trick’, Grant argues: ‘One of the things we always cry out for is a more robust judge and a system at the front end. They allow a lot of claims through because they don’t invest the time at that stage to deal with the person who has no claim whatsoever.’
To make matters worse, Goodwin notes, the court infrastructure is creaking. ‘We’re living through an era of austerity and cuts, and the tribunals have been hit along with the courts service generally,’ he says. ‘There’s even less time and there are fewer judges to deal with these things at the front end.’
Liza Battat, an employment lawyer working in-house at Aon, believes fees have weeded out many spurious claims and her employer welcomes this. But she adds: ‘Because we are a big organisation, we do want to settle, so we take reconciliation and mediation and all of that good stuff very seriously.’ Moreover, Battat says, an organisation should want to know why an employee is dissatisfied enough to consider bringing a claim, ‘to see whether someone does have a concern or worry which we [the employer should] try to deal with before actually getting to tribunal stage’.
Bringing a claim can be stressful and time-consuming, which Fox cites as a contributing factor to the fall in employment claims. ‘Very few clients want to establish a point of principle in the tribunal, in the EAT, in the Court of Appeal and the Supreme Court,’ he argues.
‘That is not what employer clients want and it is not what employee clients want. They want a resolution – a settlement – which means that they can continue with their lives.
‘I’d like to think that one element which has prompted the reduction in the number of tribunal cases is that more and more people realise that the tribunal system is not serving their own ends. We’ve all seen cases which have gone to a tribunal, they’ve gone up to the EAT, the EAT has then directed that the case be reheard on a different basis by a tribunal.
‘Lots and lots of money spent, people’s lives affected – but no closer to a resolution.’
Even where a client wins outright, Fox says, the ‘stress and unpleasantness of litigation’ makes this a questionable strategy to pursue.
Trade union lawyers offer a contrasting perspective. Rakesh Patel, national head of employment rights strategy at trade union firm Thompsons, says: ‘Coming from a claimant perspective, I do have clients who fight a claim because of the principle – partly, I guess, because they’re not paying.’
But the nature of the claim is key: ‘When you’re dealing with individual clients who perceive they have been discriminated against… it’s very difficult to persuade them to settle.’ That said, ‘the unions are very sensible in terms of their funding and support strategies – what claims they’ll support and what claims they won’t’.
David confirms that union support can in fact act as a filter for unmeritorious claims: ‘As a union, we take claims that have reasonable prospects of success.’
With the cost of bringing a claim on the rise, is there an opportunity for innovation in funding claims which unions do not underwrite?
Bircham Dyson Bell partner Nicholas Le Riche cites the advent of crowdfunding. Like the fundraising platform JustGiving, potential claim backers can log on and view progress to the target.
Such an option requires a communications strategy, however – just as media-savvy junior doctors won widespread coverage for crowdfunding a legal challenge to the imposition of new contracts.
More common, Le Riche says, is the use of home insurance which includes legal expenses insurance: ‘That’s becoming more important now [on] the claimant side.’
Hand in hand with tribunal fees came the principle of ‘protected conversations’. In common with many previous employment law reforms, this has its roots in a conviction that employment disputes turn ‘legalistic’ too quickly.
According to this line of thinking, with serious sanctions attached to discrimination, employers and employees have their guard up in early discussions about performance or a grievance. If only there could be a frank discussion, with no consequences for any subsequent dispute, the logic runs.
Battat describes an ideal scenario where protected conversations could help from an employer perspective: ‘We would like to rely on “protected” conversations to say: “Look, you’ve been a poor performer for a number of years. We’ve got no documentary evidence, but you know it, we know it. Nobody’s sent the emails to you to say, ‘Follow this up, you haven’t had your meetings with HR,’ but it’s clear, and you’re a bully and you’re sick.”
‘So, we [as the employer] want to have these honest conversations to say, “Look it’s just not working. There’s no ‘protected’ characteristic issue here, it’s just not working out for you and for us. Let’s pay you a good sum of money to go, a good financial cushion to say, ‘This will help see you through’.”
The reality has been different, not least because the scope of the protection is narrowly defined. Battat explains: ‘We just don’t have the ability to do that because when we have had those “protected” conversations, we’ve got slammed by the lawyers who say, “[The conversation] wasn’t ‘protected’, you missed this, you missed that, and you didn’t meet this deadline, it wasn’t in writing, it should have been this way”.’
Fox believes the solution is even stronger protection around such conversations: ‘It’s quite clear to me that “protected” conversations and their scope ought to be extended to cover allegations of discrimination and other “protected” characteristics.’
There is resistance to this proposal. Patel notes: ‘I’m not sure why you’d want to have a “protected” conversation from a claimant perspective.’ Other options, he notes, are ‘without prejudice’ communications and, in mediation, the involvement of conciliation service Acas. However, in cases where both parties are represented, other group members say the effectiveness of Acas’s involvement varies.
The discussion closes with potential simplification of employment law. Fox suggests: ‘The consultation process in redundancies is, repeatedly, a sham. In fact, I have great difficulty in remembering a genuine consultation, whether you’re acting for an employer or an employee.
‘The decisions are business-driven, and however carefully you go through the process, it doesn’t change things.’ As a result, he concludes, consultation should not be mandatory.
This elicits a mixed response. ‘I agree in 95%, maybe 99%, of cases,’ Nicolle replies. ‘But there’s always that case of the individual who says during individual consultation, “Well, have you taken into account the fact that I had a poor sickness absence [record] because of treatment for ‘X’ or ‘Y’ or these particular circumstances? Have you considered whether the pool for redundancy selection has been appropriately formulated and should I be considered alongside ‘X’ or alongside ‘Y’?”.
‘I have seen employees who’ve raised these issues and who have potentially benefited, but also employers who have had matters brought to their attention which potentially saved them, perversely, from an unfair dismissal, because of a flaw in the process.’
From their experience in-house, O’Rourke and Battat are doubtful about reforming consultations. ‘It might be we’re talking about when you’ve got remote managers who don’t know the individuals and they don’t necessarily know the local business case,’ O’Rourke explains. ‘Seeing the comparison with the US model where in a restructure, employees are told of a decision in a meeting room… and they collect their boxes and they leave, at least the UK process has a bit more compassion and time in the process for people to absorb what’s happening, to understand, and at least have some discussion on the severance terms.’
Battat notes that the way in which changes are brought in affects relationships. Aon values its employee forums and, where unions have played a bigger role in the past, she notes that union reps proved key to structural change and resolving individual disputes. ‘We we want to be the employer who is compassionate, who does see that this is not just 65 names who are getting their letters and envelopes. These are people’s lives that we’re dealing with.’
For Le Riche, what is in prospect in terms of ‘simplification’ of employment law can be bluntly summarised as straightforward dilution – whatever the prime minister says. ‘The safety net of being members of the EU has now gone. Without [EU] protection, and with the political climate as it is at the moment, it’s unlikely that reform will be anything less than deregulation.’
This article was first published in the Law Society Gazette on 24 April 2017.