The Government has announced two important changes which are intended to reduce the number of employment tribunal claims and encourage growth in the economy. Headline grabbing figures bandied about by the Government a few days ago after announcing the latest employment law reforms claim that there will be £6 million savings and a reduction of 2,000 tribunal claims.
Rena Magdani, employment law partner at leading law firm Freeth Cartwright said: “From April 2012, the qualifying period of service for employees to bring an unfair dismissal claim will be increased from one year to two years. In addition, from April 2013, employees will, for the first time, have to pay a fee if they wish to bring a tribunal claim.
The new proposals, which are part of a range of initiatives published earlier this year in the Government’s consultation “Resolving Workplace Disputes”, are intended to save businesses £6 million a year and lead to a reduction of 2,000 employment tribunal claims per year.”
The increase in the qualifying period of service is intended to give businesses greater confidence to hire new staff, a move aimed at bolstering the economy and generating growth and is aimed at giving employers a longer period of time to assess an employee’s suitability for the job.”
The introduction of fees is particularly welcome news for businesses. They should help to weed out claims, which are time consuming and costly for employers to defend and will bring the tribunal system into line with the family and civil courts. The level of the proposed fees has not yet been announced and will be subject to further consultation beginning in November 2011, although reports suggest that there may be an initial fee to lodge the claim and a further fee once the case has been listed for hearing.
The Employment Tribunals and EAT Statistics for 2010-11 show that employment tribunals received a total of 218,100 claims between April 1, 2010 and March 31, 2011, representing an eight per cent fall compared to 2009-10. It is hoped that the new rules will lead to a further reduction in claims. The CBI has described the new measures as a positive step, whilst, the unions have accused the Government of eroding workers’ rights for little economic gain.
Does this mean that businesses can hire and fire at will, as long as they remain under the two-year threshold?
Mrs Magdani continues: “Not exactly – whilst the proposed increase in the qualifying period to bring an unfair dismissal claim is welcome news for employers, there is a risk that this will lead to an increase in employees bringing other tribunal claims such as discrimination and whistle blowing claims, which do not require a minimum qualifying period of service. Such claims are usually complex, time consuming, expensive to defend and have uncapped compensation, so the net effect may not be as substantial as anticipated in reducing the number of tribunal claims.”
So, although the new legislation will benefit employers, there will still be a need for a high level of vigilance when handling employment matters, to ensure that employers do not open themselves up to costly tribunal claims.
