By Marcus Leach
Changes to unfair dismissal rules, which could save nearly £6 million a year for British business, have been confirmed by Business Secretary Vince Cable and Chancellor George Osborne.
Here, Allison Grant, Partner at Lester Aldridge LLP, talks about the impact the changes will have on businesses in the UK.
"On 3 October 2011 the Government confirmed that with effect from 6 April 2012 the qualifying period of service required for an employee to present a claim for unfair dismissal would be extended from 1 to 2 years," Allison said.
"This proposal was tabled in January 2011 as part of a range of initiatives set out in the Government’s consultation “Resolving Workplace Disputes”. The Government press release has estimated that the change will save £6million per year, with a reduction of 2,000 claims each year.
"The increase will provide employers with a greater opportunity to assess the suitability and performance of new employees and more flexibility in terminating their employment if they are deemed not to be meeting the required standards.
"Currently, an employee can present a claim for ordinary unfair dismissal once they have 1 years’ service. However, there are certain exceptions to this when an employee with any length of service can present a claim for unfair dismissal. Key examples include where the individual has been dismissed for making a protected disclosure (i.e. whistle blowing), in relation to trade union activities, health and safety reasons or pregnancy, maternity or other ‘Family Friendly’ rights. It is expected that these exceptions will continue to apply and will no doubt become more important with the future increase in the qualification requirement. There may also be an increase in allegations and claims relating to discrimination which also do not require any qualifying period.
"The qualifying period was previously 2 years and at the time there was a challenge to the qualification period on the basis of indirect sex discrimination (R v Secretary of State Ex. P Seymour-Smith (2000) — a case which was based on a dismissal which took place in 1991, although the legal challenge continued until 2000!). Mrs Seymour-Smith claimed that the requirement for 2 years’ service to bring a claim for unfair dismissal was indirectly discriminatory against women, and therefore incompatible with the Equal Treatment Directive, since less women were able to comply with the requirement (to have 2 years’ service) than men. The House of Lords held that although the 2 year requirement did constitute indirect discrimination contrary to the Directive the Government had ‘objectively justified’ the requirement — to encourage recruitment by employers. In 1999 the 2 year qualifying period was reduced to the current 1 year requirement. It remains to be seen whether another challenge to the 2 year requirement will be mounted once the increase takes effect in 2012 and if so, whether the challenge would result in the same outcome as in the earlier Seymour-Smith case.
"The increase to 2 years will bring the position in line with the qualification requirement for a redundancy payment which, under the statutory scheme, requires an employee to have 2 years’ service.
"The announcement also included the possibility of other measures which may be considered favourable by employers — in particular, the possibility of introducing fees for those who wish to make a claim to the Employment Tribunal. It has been reported that the Government is to issue a separate consultation paper on this, with a view to the introduction of fees in April 2013. There has been some discussion as to the likely fees which may be introduced but as yet nothing has been confirmed. The Government has suggested that introducing fees may stop vexatious claims (and ‘have a go’ claimants). However, it may also prevent those employees that have been unfairly dismissed from exercising protections that they are afforded under current legislation. In addition, the increased administration costs of processing the fees may stretch the already pushed Tribunal system even further. No official announcement or confirmation has yet been made.
"For the time being then we will have to ‘watch this space’ in relation to the fee issue — employers will also have to wait to see if transitional provisions are introduced to cover the increase in the qualifying period for existing employees or if it will only apply to those employed after the April 2012 date."
Join us on