The People Bulletin

Speaking at the Conservative Party conference Chancellor George Osborne has announced that the qualifying period for unfair dismissal claims will double from one year to two in an attempt to end the “one-way bet against small businesses”.

Responses

However, the announcement has been met with a mixed response.

John Philpott, chief economic adviser at the CIPD said:

“While watering down unfair dismissal rights is seen as a way to boost recruitment and improve job prospects for young people and the long-term unemployed, the short-run impact will be limited by the overall weak state of the labour market while in the long-term any positive effect on hiring is likely to be offset by a corresponding increase in the rate of dismissals.

“Increasing the qualifying period for obtaining unfair dismissal rights runs the risk of reinforcing a hire and fire culture in UK workplaces which would be detrimental to fostering a culture of genuine engagement and trust between employers and their staff and potentially harmful to the long-run performance of the UK economy. Although the policy change will undoubtedly be welcomed by the deregulation lobby, it isn’t the way to boost growth and jobs”.

Conversely, John Cridland, director-general at the CBI welcomed the changes:

“Extending the qualifying period for unfair dismissal is a very positive step.

“We have been urging the Government to do everything it can to make it easier for firms to grow and create jobs, and this will give employers, especially smaller ones, more confidence to hire.”

Similarly, Nick Squire, an employment partner at Freshfields Bruckhaus Deringer saw potential benefits in the change, however he also sees difficulties with the change. Squire commented:

"This change may appease those employers who regarded the introduction of the agency regulations on Saturday as another painful addition to the legislative burden on the employer.”

He goes on:

“Agency workers now have substantial additional rights in the workplace but at the same time the unfair dismissal protection that they may find easier to acquire will shortly move further away from grasp.

"We may also see an increase in "manufacturing" of claims for which there is no service requirement, such as discrimination and whistleblowing. There is currently a sense that this sometimes happens for employees with less than 12 months' service.  Whether that trend will increase with the time limit being extended is an open question but it does mean that employers should continue to go through formal processes prior to dismissing employees with less than two years' service”.

Tribunals

In addition to this Osborne also outlined the fees that must be paid by employees who want to bring a tribunal claim against an employer. From April it will cost £250 to apply for a tribunal and a further £1,000 if a hearing is granted. This will be refunded if they are successful. The government has said that "poor claimants" will not have to pay, although the criteria for this have not yet been set. The fees have been introduced in order to reduce the number "vexatious" claims. It is estimated that these changes will result in 2,000 fewer tribunals each year, meaning a saving for business of £6million. 

www.cipd.co.uk

www.cbi.org.uk

www.freshfields.com

See also: 'Proposals on tribunal reforms: good news or not?' by Leah de Vries in The People Bulletin, 23 March 2011

and

‘Tribunal reform: workplace disputes a thing of the past’ by Andy Willis in The People Bulletin, 1 September 2011.