UK: Employment Law 2005 Preview

This month we look ahead and highlight some of the employment issues which are likely to hit the headlines in 2005.

Probably the biggest change in employment law in 2005 will be the introduction of the Information and Consultation of Employees Regulations, which will come into force on 6 April. The Regulations will give employees the right to request that their employer enters into negotiations for an agreement, which will set out procedures for informing and consulting workforce representatives on a range of business issues. If an agreement is not reached within certain time limits, standard default provisions contained in the Regulations will apply. Though initially the Regulations will apply only to businesses with 150 or more employees, they will be gradually extended to apply to all businesses with 50 or more employees by April 2008. For employers who will be affected by the new legislation, entering into a voluntary information and consultation arrangement before employees can make a request under the new rules could give employers more flexibility and may enable the avoidance of some of the more stringent default provisions of the Regulations. We at Mishcon de Reya have already set up a Staff Consultative Committee in accordance with the Regulations, so we can advise on the law and the practicality of setting up a Committee at your business.

Towards the end of this year, we will also see further changes being made to the Disability Discrimination Act 1995. The requirement that a mental impairment needs to be 'clinically well recognised' in order to satisfy the definition of a disability is to be removed. However, an employee will still have to prove that the impairment has a substantial and long-term effect on his ability to carry out normal day-to-day activities. The requirement, which only applied to mental impairments, will be removed after lobbying from mental health charities, who argued that it created an inequality between people with mental health problems and other disabled people, and was therefore discriminatory in itself.

The point at which specific progressive conditions are considered to be a disability is also set to change. Previously, an illness only constituted a disability once it began to have a substantial effect on the sufferer's ability to carry out day-to-day activities. However, once the changes come into force, employees suffering from multiple sclerosis or cancer, as well as those who are HIV positive, will be covered by the Act from the point of diagnosis. The effect of this is to offer protection to employees at a much earlier stage in the development of their illness. Commentators have suggested that there are other illnesses, such as Motor Neurone Disease, that are obvious candidates for similar treatment under the Act, but we will have to wait and see how the legislation develops in the future.

Statutory awards are about to increase. The statutory cap for the compensatory award for unfair dismissal will be increased from £55,000 to £56,800. At the same time, the cap on a week's pay for the purposes of calculating the basic award for unfair dismissal and redundancy payments will increase from £270 to £280. The new awards will apply to dismissals taking effect on or after 1 February 2005.

Looking further ahead, consultation is continuing on the age discrimination legislation expected to come into force in late 2006. In December 2004, the Government announced how it intends that legislation will approach the issue of mandatory retirement ages. Under the government's plans, a default retirement age of 65 will be set. However, employees will have the right to request working beyond this age and employers will have a duty to consider the request. In addition, employers will be able to set an earlier retirement age, as long as this can be objectively justified.

The legislation is still far from being approved by Parliament and the rest of the year will be spent consulting further on draft regulations covering retirement ages and other issues surrounding age discrimination.