George Osborne recently announced some major changes to the Employment Tribunal (ET) system at the Conservative Party conference. It is proposed that effective 1 April 2012 there will be an increase in the qualifying period of service required to bring an unfair dismissal claim from one to two years. The Chancellor announced the change as one of a series of measures purportedly to help small businesses but it is the case that the proposed extension of the qualifying period is not confined to small employers and will apply to all employers irrespective of their size.
In the current economic climate, it is the Government's stated hope that the changes will result in employers hiring more people without the worry that they will face vexatious claims for unfair dismissal. Mr Osborne believes that preventing employees with less than two years service, from bringing a claim for unfair dismissal will 'respect the right of those who have spent their whole lives building a small business not to see that achievement destroyed by a vexatious appeal to an ET.' The Government's expectation is that this will reduce the number of tribunal claims from between 2,000 and 3,000 per year.
On the whole employers' organisations have welcomed the change and there is no doubt that there will be a reduction in unfair dismissal claims being brought to ETs. It is notable that for 2010-2011, unfair dismissal claims accepted by ETs fell by almost a fifth compared with the same period in 2009-2010 and of the 244,000 cases disposed of by the ETs, less than 50,000 were unfair dismissal claims.
In stark contrast, working time related claims have risen from 24,000 in 2008-2009 to 114,100 in 2010-2011. There is an argument to suggest that despite what the Government is saying, when it comes to grappling with employment law and employee rights, unfair dismissal really is not the issue for employers. It is also suggested that in reality the more contentious issues in employment law are covered by EU directives and are not therefore as easy to change.
Opponents to the change argue that raising the qualifying threshold for bringing an unfair dismissal claim simply allows employers to treat their employees badly without fear of repercussion. Dr John Philpott, Chief Economic Advisor at the Chartered Institute of Personnel and Development suggested in the CIPD press release on 3 October.
'the vast weight of evidence on the effects of employment protection legislation suggests that while less job protection encourages increased hiring during economic recoveries it also results in increased firing during downturns. The overall effect is thus simply to make employment less stable over the economic cycle with little significant impact one way or the other on structural rates of employment or unemployment.'
The statistics seem to support the contention that it is not unfair dismissal which poses the real challenge to employers. April 2010 to March 2011 saw 25% of the claims withdrawn, 41% conciliated by ACAS and a further 11% struck out without a hearing. For employers the challenges are coming from working time directive claims as well as disability and age discrimination. With the Government commitment to increasing flexible working in the workplace, many employers would welcome much clearer regulations and would like to see a more effective filter at the claim acceptance stage to remove the more vexatious discrimination claims.
Bringing back a two year qualifying period is likely to provoke historic arguments that the law has a discriminatory effect on women, as they are less likely to have continuous service because of taking time out to have children. In the event the courts did not agree on the last occasion this was debated but, it is thought that there will be a further challenge. It is also likely to cause challenge on behalf of young workers. It is estimated that three out of five 20 year olds presently have employment protection but with the change to the law that will go down to one in five.
If unfair dismissal is not available then it is felt that we shall see an increase in the number of discrimination and whistleblowing claims as there is no qualifying period for these claims and compensation is not subject to any cap.
The Government is still consulting on the issue of tribunal fees but it is being suggested that the fees will be in the region of £250 to file a claim and a further £1,000 when the matter is listed for hearing. There is talk of increasing that sum if the value of the claim is in excess of £30,000. This is also creating some controversy as there are those who believe that once fees have been paid, the case will be far more difficult to settle and for those without wages, there is the possibility that they will be exempt from paying the fee in any event. That remains to be seen but one is left to wonder if being made to pay a fee will actually have very much effect on the truly vexatious claimant.
There is no doubt that some small businesses and indeed some large businesses will obtain benefit but with unfair dismissal claims counting for perhaps 15% of the cases accepted in 2010-2011, is unfair dismissal really the problem?