Osborne to target workers' rights with review of employment law

Workers are set to receive less protection against redundancy, dismissal and workplace discrimination as the Chancellor George Osborne tears up sections of employment law so businesses can dispose of their staff more easily.

Mr Osborne announced that the Government intends to erode many long-held employment rights so that companies could have a more "flexible" approach towards their employees.

He said that such an approach was needed to help employers in financial difficulty and push the Government's broader aim of supporting private-sector growth. The Coalition is making more than half a million public-sector job cuts, and relying on the private sector to make up that shortfall in the employment market.

Mr Osborne has proposed imposing a cap on awards given in cases of discrimination and abuse in the workplace on the grounds of race or gender. Employers will also be able to sack people more quickly.

As well as introducing fees and new rules to prevent "vexatious" claims at employment tribunals, the Government wants to review the unlimited penalties currently applied in employment tribunals, simplify the administration of the national minimum wage and reform the consultation period for collective redundancies.

The latter, under which employers must inform the Business Secretary of significant redundancies within 90 days, could see the window shortened to 30 days. Given current rules on balloting for industrial action, that would weaken the ability of trade unions to resist sackings before they happen. For now, there are no proposals affecting strikes and industrial action.

Other rights enjoyed by low-paid staff whose companies are privatised or taken over will also be targeted.

The Chancellor told the Institute of Directors' annual convention in London that he will publish a "detailed timetable for the wholesale review of employment law in this country", to tackle the "costly impact of our employment laws and regulations".

Mr Osborne attacked the trade unions as "the forces of stagnation" who "will try to stand in the way of the forces of enterprise". The Chancellor's words were criticised by the unions and Labour Party. John Denham, the shadow Business Secretary, said: "George Osborne's only idea for growth is to make it easier to cut pay and pensions, dismiss employees without giving time to plan for the future, and make working life more insecure. Successful companies have a workforce that is confident, dedicated and fairly rewarded."

Brendan Barber, general secretary of the TUC, added: "Reducing protections for staff facing takeovers, discrimination or redundancy will make life even harder for vulnerable workers. It is disappointing to see the Chancellor dressing up this political attack as some kind of growth strategy."

Much of the framework of employment law is part of European law, which can only be altered through difficult international negotiation. This specifically affects the proposals to cap awards for discrimination – which have seen notable claims and awards emanating from the City of London.

The long road to workplace justice

The battle over the rights of employees is centuries old, with trade unions winning legal recognition in Victorian times, and pension rights, minimum wage legislation and unemployment benefit making their first appearances after a Liberal government was elected in 1906.

But most of the rights and benefits that George Osborne was talking about yesterday are more recent developments. Interestingly, some of what the Chancellor now sees as a drag on business was introduced by Conservative governments. The Employment Law that required businesses to give a worker notice before ending their employment was brought in during the final months of the Macmillan government in 1963.

The incoming Labour government used that legislation as the basis for introducing redundancy for people who lost their jobs, and passed the first law that made discrimination in the workplace illegal – though it applied only to racial discrimination. Sex discrimination was banned in 1978, and discrimination against the disabled was banned by John Major's government in 1995.

By then, most employment law had passed out of Parliament's jurisdiction as the EU began passing edicts to equalise employee rights across the continent, as a way of eliminating unfair competition.

As far back as the 1960s, an EU edict made it illegal for men and women to be paid different rates for doing the same work. This was incorporated into UK law as the 1970 Equal Pay Act. In 1975, the EU issued a directive on the rules a company must follow before issuing mass redundancy notices, which has been revised from time to time, but is still law.

In 1981, when Mrs Thatcher's government was crusading to curb trade union power, the EU implemented a directive on TUPE, which laid down that when a business is sold or taken over, the employees' contracts of employment are still as valid as if they had been made with the new employer. This has also been revised occasionally, but is still in force.

When Mr Major was negotiating the Maastricht Treaty in 1991, he secured a UK opt-out from the Social Chapter, which meant that employment law was different in the UK, until the Labour government signed up to 1997's Social Chapter.

Andy McSmith