Will the proposed “Employers Charter” make employers lives easier?

17th January 2011

Will the proposed “Employers Charter” make employers lives easier?

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The government proposes to launch consultation on what is being called a new “Employers Charter”. The proposals were discussed last week at a jobs summit at Downing Street, attended by a number major British employers. The proposals include a rise in the qualifying period for unfair dismissal from one year to two and a fee to bring employment tribunal cases in an attempt to discourage nuisance claims.

The aim is to reduce red tape and to make it easier to employ people in the UK. According to David Cameron, this will be “the most pro-business, pro-growth, pro-jobs agenda ever unleashed by a government”, quote taken from http://bit.ly/fej43O

The proposal on the length of service requirement for unfair dismissal makes for great headlines “Proposed job law gives bosses ‘carte blanche’ to fire workers” from the Scotsman on 11th January for example, but is this really going to be a big help to businesses? We don’t think so. When we first started EmployEase, the qualifying period was two years. What tended to happen was all those employees with less than two years service sought to bring claims under legislation that didn’t require any length of service. Typically, these claims were under the discrimination legislation, although there are other types of claim that do not require any length of service.

It is our view that if we return to a two year qualifying period, we are likely to see a rise in these types of cases. With nine protected characteristics under the Equality Act, it is not going to be that difficult to potentially find a claim. The problem is that these cases are generally more complex, more expensive to defend. In many of these cases, the cap on compensation (currently £65,300) is lifted, so potentially there is a lot more at stake. Finally, many employers tend to dismiss those employees who do not have the required length of service without any procedure. This means that a lot of time (and money) is spent in the tribunal giving evidence on the content of the meeting.

In terms of the fee for bringing a claim, it will be interesting to see whether there are any exceptions. Commentators are already wondering whether unemployed people will be exempt from the fee. Given that most people bringing unfair dismissal claims are unemployed, it is not a sensible suggestion. More importantly, the tribunal system has always been free to claimants and it is not this fact that is the problem. What might be more helpful is a more robust method of early vetting of new claims to ensure that there is a prima facie claim and that the claimant is not a serial litigator.

As always, the devil will be in the detail. In our opinion, it is not no rules that British businesses need, but clear consistent rules that governments do not regularly meddle with.


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