In the midst of the party conference season, two major changes have been announced which are aimed at reducing the number of claims brought by former employees.
A review of the employment tribunal system has long been on the radar of the coalition government, with a consultation launched earlier this year considering wide-ranging reforms. Ideas such as increasing the qualifying period for unfair dismissal and introducing fees for bringing a tribunal claim were raised and it seems that the government has decided that these measures should now be implemented to help in creating jobs and promoting economic growth.
1. Change to the qualifying period for unfair dismissal
The qualifying period for the right to claim unfair dismissal will be increased from one to two years from 6 April 2012. Two years may sound familiar to some, as it used to be the previous qualifying period before the current one year period was introduced in 1999.
This change will undoubtedly be welcomed by employers, but caution should be exercised. It is likely to lead to an increase in the number of discrimination or whistleblowing claims instead (where there is no qualifying period), and the risk with these claims is that compensation is uncapped. Therefore, the change may inadvertently prove more costly for employers in the long run.
A two year qualifying period is also contentious from a European perspective. It was held in Seymour Smith (in 2000) that a two year qualifying period was indirectly discriminatory on the grounds of sex; although the House of Lords went on to find that it could be objectively justified by the government as a legitimate aim of its social policy. The arguments raised in Seymour Smith remain valid today and arguably go beyond sex and apply to even more protected characteristics, such as age and race. Therefore, it is possible that it will be subject to a further legal challenge when it is introduced in April next year.
2. Introduction of fees for Employment Tribunals Chancellor George Osborne also announced at the Conservative party conference that a fee for bringing a claim to an Employment Tribunal will be introduced from April 2013, which claimants will only be able to recover if they are successful in their claim. There is no further detail yet, with the amount and structure of the fees to be determined after a consultation. This may be a positive
development for employers, as the introduction of fees may discourage weak or vexatious claims being made in the first place but the initial indication is that those on jobseekers allowance (the majority of claimants!) will not have to pay the fee. The two changes announced yesterday are likely to be the first wave of new measures which the government will look to introduce to revamp the employment tribunal system. The government believes that wholesale change is necessary and is committed to reform. There are likely to be further interesting developments in the forthcoming months, and we will keep you updated as and when they arise.