Unfair dismissal: will the increase in the qualifying period help businesses?
This summer has been a quiet time on the employment law front. However, the season of mists and mellow fruitfulness (and party conferences) arrived in a heat wave of proposed changes to legislation. George Osborne had two notable announcements to make regarding employment law. Firstly, the government intends to raise the length of service requirement for unfair dismissal claims from one year to two from 6 April 2012. Secondly, from April 2013, claimants will have to pay a fee for bringing a claim in the employment tribunals, which will be repaid if the claimant wins.
Changes in employment legislation have been a cornerstone of the Conservative’s plan to make the UK an easier place to do business. Currently, the Cabinet Office’s Red Tape Challenge is focussing on employment law and is worth commenting on at: http://www.redtapechallenge.cabinetoffice.gov.uk
Of all the employment changes announced by the government, the two measures we are discussing today are the easiest for the government to take as they do not derive from European legislation. We had already blogged about the increase in the qualifying period. https://www.employease.co.uk/blog/?p=57.
It may not be as good news for employers as it appears to be. Lured into a false sense of security many employers will not follow any process when dismissing an employee in his or her first two years of employment. However, the two year qualifying period is only a bar on unfair dismissal claims, not a bar on all claims. The following claims, to name a few can be brought by and employee irrespective of length of service:
- Discrimination based on one of the 9 protected characteristics
- Dismissal for asserting a statutory right
- Health and Safety dismissals
An employee can make a claim in the employment tribunals irrespective of length of service if, for example, the employee can make a link between his or her dismissal and race, that they complained about the size of your fire exits, or that they threatened to report you to HMRC, they can be bring a claim irrespective of their length of service. Whilst the burden of proof will be heavy for the employee, it will not be insurmountable if their employer did not follow any process. Defending these claims are usually more time consuming and costly than fighting an ordinary unfair dismissal claim. It is likely that the increase in the qualifying period will cause an increase in these types of claim.
We also predict an interesting effect during the transition period. It is very likely that tribunal claims are going to rise sharply immediately before and after 6 April 2012.
Many employers will delay dismissing any employee who has more than one year and less than two years length of service until 6 April 2012. On the other hand, employees may be tempted to call the shots and resign with a view to claiming constructive dismissal (i.e resignation caused by the employer’s breach of contract) before the 6 April 2012.
Regarding the introduction of a fee to lodge a claim, according to BBC Business News, the fee is likely to be £250 simply to lodge the claim with a further £1,000 once the claim has been listed for hearing and more if the case is over £30,000. Over this year, we have a seen a notable increase in tribunals sending out the claim to the respondent company with a hearing date already listed. Although this practice has never been explicitly explained, it is very likely that the purpose of this practice has been to increase the number of claims getting to a hearing within the employment tribunal service’s target of six months from the time the claim was lodged. With the introduction of a fee on listing, either this practice will stop or the claimant will find that the fee is effectively £1,250 or more right off the bat.
It is likely that the new fee structure will not apply to claimants who are low waged or unwaged. Since many claims are made by people who are now unemployed, the rules on this part of the scheme will have to be thought out carefully, otherwise it will be toothless.
Will these measures have a long term effect on the overall number of employment law claims? Probably. Will it help Britain’s economic recovery? That’s going to be more of a gamble.