Why businesses must get ahead of changes to employment law now
Be proactive and ready to idenfify problems early, advises Anya Duncan
People and technology are perhaps the two most important issues facing employers right now, irrespective of which industry the business is in. At the moment, we have the perfect storm. The developments in artificial intelligence (AI) over the last five years have been groundbreaking and for employers, it has helped to drive efficiencies.
When it comes to disputes with employers, for some employees who may otherwise struggle, AI assists them to articulate any issues they may have with their employers. However, for others, it can be used as a tool to make spurious claims.
With the evolution of technology, AI is more readily accessible, and employees are therefore finding it easier to raise grievances – and if those don’t achieve the desired outcome, to enter Employment Tribunal proceedings.
Lengthy narratives are met with a groan from the recipient, leaving them contemplating how to manage the issues therein. This is what is key – being able to identify the issues properly (if there are any of substance) and work out a solution. This won’t always be easy but doing so will be invaluable if matters are to be de-escalated at the earliest opportunity.
What happens if resolution isn’t possible? Most likely Employment Tribunal proceedings. The most recent statistics note the open caseload for the Employment Tribunal is up 55 per cent when compared with the same period last year. It is almost a certainty that this statistic will keep on increasing. Why?
On top of the use of technology, we also have the implementation of the most substantive employment law reforms to be seen in this generation.
What’s changing? In short, a lot. In relation to unfair dismissal law with effect from 1 January 2027, the qualifying period required to claim unfair dismissal will reduce to six months from two years; the time period within which Employment Tribunal proceedings can be initiated will extend from three to six months; and there will no longer be a cap on the compensation that can be awarded.
These changes will have a significant impact on senior executive terminations. Previously, claiming unfair dismissal would be of limited value when compared to their remuneration package. With no cap in force, the value (or potential value) of benefits such as bonus, shares and share options will result in high value claims worth pursuing by the individual and worth defending by the employer. Such claims will have their own complexities, assessing appropriate compensation may require a remedies hearing, putting further strain on an already overburdened system.
That’s not all. Enhanced trade union rights, high standards in relation to the prevention of sexual harassment and extending the duty to prevent harassment by third parties, and substantial changes to the law on fire and re-hire, are among the many reforms.
Being prepared for the changes and making decisions about people now are critical. Employees who start work now will be able to claim unfair dismissal come January 2027. Being reactive to employment issues will come at a higher cost to businesses.
As a result of all this, it is essential to manage employment relationships proactively, and to ensure managers are educated in what’s changing, able to identify issues early – and given the right support to address them.
Anya Duncan is an Employment Partner at Addleshaw Goddard in Aberdeen