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Employment Law

Comment 16th August 2010

Employment Tribunals are the second highest cause of bankruptcy in the voluntary sector after funding cuts.  It is uneconomic to employ a human resource specialist until one has 50 employees. Employment Tribunal claims have gone up by 400% in the last year and waiting lists for hearings are growing exponentially.  Justice does not work well if there are long waiting times because people’s memories start to decay.  CABs and Law Centres receive council tax funding to take cases to employment tribunals often without doing merits tests because they are frightened of complaints to their funder the local authority.  Employers often have to pay out tens of thousands of pounds defending cases which have no merit.   The Big Society is impossible with current employment law.   Small voluntary organisations do not have the knowledge of how to operate in such a legally hostile environment. 

Employment is created by small business, these business’s are then brought by large corporations which rationalise them into the larger entity and in so doing reduce the number of jobs.  That’s what economies of scale are.  One of the costs of such behaviour could be employment law for those who employ over 50 people.  

Small business and the voluntary sector are not going to create jobs when every new employee carries such a large compliance risk.  As the cuts on the Ministry of Justice come into force waiting times for cases are going to get longer and longer and the employment law system will become unsustainable.  The answer is very simple.  Pass a law which says employment law does not apply to organisations employing less than 50 people.  Small employers will then feel much more comfortable about taking on new staff and growth will come back to the economy.  If absolutely necessary, permit the minimal level of EC required employment law, which is much less than the UK Parliament legislated for. 

An alternative suggestion (but less favoured by me) is to set a fee of £1,000 for bringing  a case to an Employment Tribunal and leave every thing else unchanged

A further point:  review all Employment Tribunal decisions every two years and legislate to remove inappropriate case law.  The Tribunals have made the whole process far to complicated.  Consider how days there in a year, once it was 365, then it went down to 364 for employment law, now it is 358.  Case law needs reviewing, because it is decided in Appeal Courts by Judges listening to cases with expensive barristers funded by vested interests and then applied to every case that looks remotely similar.   Our elected politicians should review how the law has developed on a regular basis and get it back to what the politician process intended.  Employment Law has such a major impact on jobs and the economy, bi annual reviews by Parliament should be mandatory.

Why does this matter?

It will facilitate:  The Big Society concept and make running voluntary organisations, self managed schools and small business's much easier. 

It will increase job creation and growth which is being restricted because small employers are currently frightened of the risks of being taken to Employment Tribunals with the tax payer funding the claimant and so a hesitant about taking new staff.

The biannual review will simplify the system and keep it more focused on what Parliament intended.

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