Alan Lewis, head of employment at Linder Myers advises on the changes to employment law and the impact this will have on businesses

Alan can you tell us about the key changes to employment law this year?
A raft of changes are coming in this year which will serve to give businesses more legal rights to enable them to respond to the continued economic challenges and boost growth. These include significant changes to the collective consultation period for redundancies involving 100 or more staff, a new cap being introduced in the summer for payments in unfair dismissal claims and settlement agreements being introduced later in the year to help businesses part with underperforming staff on agreed terms to avoid cases reaching costly tribunals.

Why has the government introduced these changes?
The continued recession has made trading conditions more challenging across all sectors. Small to medium sized businesses in particular will be helped by these changes as the government seeks to support the business community by introducing measures to make it easier to restructure if appropriate.

Can you explain the changes to the collective consultation period?
The consultation period for large scale redundancies involving 100 or more employees is being halved to 45 days enabling employers to quickly restructure if it becomes essential for long term business success and competitive advantage.

What changes have been introduced with regards to unfair dismissal cases?
In a further bid to support employers and boost economic growth, the compensatory award in unfair dismissal cases will be dropped from the current limit of £74,200 to the lesser of one year’s gross pay and the current limit. This is good news for businesses, particularly as the current median earnings across the UK for all employees are in the region of £28,000 and therefore the risks and costs associated with dismissals will be significantly reduced.

What are settlement agreements?
Settlement agreements are essentially a revised and renamed version of the compromise agreement but promise to be a more simplified version. Used effectively, a settlement agreement will help employers part with underperforming staff on amicable terms which will benefit both parties and avoid often lengthy and costly, tribunals. New rules will also allow employers to have off the record discussions with staff concerning the possibility of entering into a settlement agreement without the risk of such discussions being relied upon by the employee in future Employment Tribunal proceedings if the parties are unable to reach an agreement.

Are there any further changes taking place during 2013 that businesses need to be aware of?
Other potentially significant changes include the introduction of employee-shareholder agreements which allow business owners to give employees business shares in return for forfeiting some employment rights including requests for flexible working, giving up rights to statutory redundancy pay and unfair dismissal claims.

Unpaid parental leave has also been increased from 8th March by five weeks to 18 weeks. The change aims to make businesses more family friendly and employers will need to ensure they are able to respond favourably to such requests to avoid falling foul of the new legislation.