At the beginning of this month, George Osbourne announced two major changes to employment law. An employee will need a minimum of two years' service, rather than one year, in order to bring an ordinary unfair dismissal claim; and employees will have to pay to bring a Tribunal claim. The aim of the changes is to encourage employers to recruit by making it easier for them to dismiss poor performing employees. It is also hoped that the changes will decrease the number of Tribunal claims. While the TUC is up in arms about employee rights, the CBI has welcomed the move, calling it a "very positive step". You are however no doubt chomping at the bit to know our take on. To find out, all you have to do is read on...
The extension to the service requirement, so that an employee will need a minimum of two years' service in order to bring an ordinary unfair dismissal claim, is expected to come into force from April 2012 (although the government has not yet finally confirmed that the change is definite). At first glance this seems to be a boon for employers, who will now have two years to fire unsatisfactory employees without fear of an unfair dismissal claim. However, the downsides for employers may well end up outweighing this benefit.
The most obvious problem is that it will make it harder to recruit, since many employees, particularly in the current economic climate, will not be prepared to risk a two year period with no unfair dismissal rights. Secondly, disgruntled employees who do not have two years' service may try to bring other claims - citing discrimination, whistle-blowing, or trade-union or maternity related reasons, for their dismissal - in order to avoid the service requirement. This already happens when employees have less than a year's service. These claims, while they may be unsuccessful, will be more complex and consequently more expensive to defend.
A third problem is the likelihood that a legal challenge to a two-year rule will be brought on the basis that it is indirectly age and/or sex discriminatory. It has already been established that more women than men have less than two years' continuous service; the same is true of younger workers. In 1992 (when the unfair dismissal service requirement was two years) a legal challenge was brought which took nine years to be finally decided, with all relevant claims being stayed until the final decision was reached. If a similar challenge is brought, employers may face years of uncertainty before the courts decide whether this indirect discrimination can be justified.
The second - and even more significant - change, is that employees will have to pay to bring a claim. Some reports have said that the sums involved are likely to be £250 to bring the claim, and £1,000 if the case goes to hearing, with successful litigants to be reimbursed by the Ministry for Justice. Unsuccessful litigants would lose their fee. The employment minister has stated that the fees will be dependant on the employee's income, with the poorest litigants paying no fee. This change is expected to come into force in December 2013.
This proposal may well decrease the number of claims that are brought, but again there are significant negatives for employers. The most unfortunate is that in order to settle a claim the employer is likely to have to offer to cover the employee's claim fee. Few litigants will be prepared to settle at a loss to themselves. It is also unlikely that the introduction of the claim fee will discourage that unfortunate breed of litigants, who are convinced against all logic that they have an unbeatable claim ... in other words, the very people that this rule is trying to deter.
After presenting the proposals as a done deal, the government hastily back-tracked and said that nothing has been finally decided. However, it seems almost certain that the rules will come into force. It remains to be seen whether they will stand the test of time, or go the way of other failed attempts to simplify the Tribunal process such as the Statutory Disciplinary and Grievance Procedures. As is always the case with new law, you will just have to watch this space!