24/04/2012

By Richard Smith, Employment Law expert At Croner

The government is making a number of changes to employment law to encourage employers, especially those in small businesses, to hire staff as it is believed that the fear of litigation is stopping them from doing so. In addition they are looking to make savings in the running of the employment tribunal system by reducing the time taken to deal with cases and indeed the number of cases heard.

The two-year rule

From April 6 employees will need to have worked for an employer for two years’ or more before they can present a claim for unfair dismissal. This has increased by one year and is a return to the situation that existed pre 1997. However, this does not mean that employees who have worked less than two years cannot present claims to an employment tribunal; in fact employees (and some prospective employees) will still be able to make claims to employment tribunals if their dismissal is said to be based upon reasons such as pregnancy, maternity, trade union membership, asserting statutory employment rights, amongst others and to allege unfair treatment on the grounds of sex, race, disability, age, sexual orientation, religion and belief.

No fault dismissal

The government is also consulting on the idea that there could be some form of “protected conversation” or “no fault” dismissal scheme mainly for small employers (under 10 employees).Under this system the employer could pay compensation to terminate employment without needing to prove a fair reason such as conduct, capability or redundancy. It is uncertain whether this is a realistic option; some commentators have pointed out the risk premium placed on employing a tenth person in a business would be to grant all employees better employment rights and that this measure would in fact discourage growth in very small businesses.

In addition while it would be open to the UK government to restrict rights to “ordinary” unfair dismissal they can do nothing to prevent claims based on all those reasons set out above because they are based on EU not UK law. It has been suggested therefore that for the small employer it would create real confusion.

This is because they wouldn’t know when to exercise this right or when it would in fact it would create a greater risk than simply following a fair process to deal with unsatisfactory staff. Also there hasn’t been any information on the appropriate level of compensation to be paid and this will be a key determinant of whether employers seek to exercise this right.

Often, in dealing with employees it is the fear of the law and failure to take and follow sensible guidance which causes employers most problems. To dismiss an employee fairly it requires the employer to have in mind a judicious reason and then to act reasonably in using that to dismiss the employee.

Other changes to employment tribunals

Additional changes to be introduced are new rules of procedure designed to speed up cases which are largely technical and the introduction of pre claim conciliation and the requirement to pay costs to bring proceedings. Employees and employers will be encouraged to take up the offer of conciliation prior to making a claim so that opportunities are created to resolve a dispute; although this can be done at present the system will become semi-compulsory with ACAS making contact with parties in all cases rather than waiting for ET papers to be served.

Employees who wish to proceed to issue a claim will be required to pay a fee of around £250, with increases based upon the progress of the case and the amount claimed. Some doubt exists as to whether this will be applied to low paid / unemployed claimants and whether there could be challenges to the rule under EU/Human Rights grounds.

While there are definitely questions as to the strategy being adopted by Government and how effective it will be there can be no doubt that this will prove to be a very interesting time for employment law and small businesses; it seems likely that some of these changes will reduce the number of cases which are brought to employment tribunals which will benefit some employers; but whether it actually increases employment as another thing.

Find out more about Croner at www.cronersolutions.co.uk


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