Fairness at Work White Paper, DTI May 1998 (Cm 3968)

This article looks at the proposed changes to individual employment rights. The following article focuses on collective issues, including industrial action, protection and representation for individual trade union members and the controversial provisions on trade union recognition. Next month we shall focus on family friendly policies.

The 'Third Way'?

The White Paper has a personal foreword from the Prime Minister. He emphasises that even after the proposals in the White Paper are implemented, 'Britain will have the most lightly regulated labour market of any leading economy in the world'. The proposals are designed to 'put a very minimum infrastructure of decency and fairness around people in the workplace'.

This is the 'third way' advocated by Tony Blair: steering a path between deregulation and employment protection. It centres on 'the belief that fairness at work and competitiveness go hand in hand' (paragraph 1.11). It appears that this approach is now rejected by the new President of the CBI who derided the third way and spoke of 'pest control' to deal with unions. This attitude proves that fairness cannot be left to voluntary measures by employers: legislation is necessary.

Last Word before the Election

The Government stresses that once Fairness at Work becomes law it does not envisage any further employment rights legislation. It emphasises the other measures already taken or proposed (for example on minimum wage, whistleblowers, tribunal procedures and implementation of European measures).

But we must assume that measures omitted from this legislation will not appear elsewhere before the next election. Royal Assent is not expected before next summer.

Wider Protection

We have reported frequently on the issue of employment status and employment rights (most recently Carmichael v National Power - see Issue 23 of LELR, Employee power).

Labour has shown a positive approach, ensuring wider protection by adopting a broad definition of "worker" in the proposed legislation on the minimum wage and working time. It now proposes to extend this approach to other rights at work. This is an extremely welcome and progressive proposal.

Unfair Dismissal: Qualifying Periods and Limits

The qualifying period on unfair dismissal will be reduced from two years to one year. This is a welcome development, no doubt influenced by the European Court case of Seymour-Smith where the Advocate General is due to give his Opinion on 14 July. But one year is still too long and if the implementation is not brought forward before the rest of the legislation, there will still be indirect discrimination claims by those who have lost out in the meantime.

The abolition of the maximum compensatory award for unfair dismissal deserves sustained applause. The Government should have accompanied this by abolishing the maximum limit on a 'week's pay' which determines basic award and statutory redundancy pay.

It has not done so, but proposes instead to uprate this and other maxima. It is unlikely that this uprating will fully match the levels of inflation since the limits were first introduced. This will mean that subsequent index-linking will not remedy the injustice.

The Government should also address the proper calculation of compensation, by removing the unfairness caused by deducting payments in full even where loss has been reduced by a percentage (Digital Equipment v Clements - see Issue 19 of LELR, Digital compensation doesn't add up).

Critically, the Government should remove the test which says that a dismissal is only unfair if it is outside 'the range of reasonable responses of a reasonable employer'. This case-law test has undermined the original purpose of the legislation.

Fixed Term Contracts

Fixed term contracts lead to unfairness and abuses (see Kelly-Phillips v BBC - Issue 21 of LELR, Court gives green light to rogue employers). The Government recognises that workers are often obliged to accept fixed term contracts for open-ended jobs, often successively renewed over long periods of time.

In a welcome move, the Government proposes to prevent workers on fixed term contracts giving up their rights to claim unfair dismissal when the contract comes to an end. They may still sign away rights to redundancy payments.

Zero Hours

Labour's manifesto promised to deal with the issue of zero-hours contracts. The Government has been persuaded that it needs to 'retain the flexibility that those contracts offer business'. It considers that the National Minimum Wage and Working Time Directive provide important protection, but seeks views on whether further action is necessary to prevent potential abuses.

What is Missing?

Disappointingly, there is nothing in the proposals which deals with an issue critical to fairness at work: workplace bullying. Current legislation does not provide adequate protection. A positive right to dignity at work is required, backed up by enforcement mechanisms which allow the issue to be resolved in the workplace.

There are no proposals to extend the coverage of discrimination legislation. In particular, there is no mention of employment rights for lesbians and gay men. Recent pronouncements from the Home Office give cause for concern on this issue and the outcome of the Grant case (see Issue 20 of LELR, Same sex, but different discrimination rules) highlights the need for urgent action.