New rules governing unfair dismissal claims are going to mean big changes for employment tribunals. Here, Sonia Mangat, a solicitor in the employment team at Lodders Solicitors in Stratford-upon-Avon examines the shake-up surrounding unfair dismissal claims.
On April 6 the unfair dismissal qualifying period rises from one year to two. It will affect those who start work on or after this date.
On top of that the Government has announced a fee system will be introduced but probably not before 2013-14. As well as reducing the cost to the taxpayer, the aim is to encourage both sides to consider carefully the strength of their case and whether they could resolve the matter outside the tribunal – saving time and money and reducing the emotional cost that proceedings can bring.
The moves are partly in response to pressure from employer groups who insisted too many disgruntled employees were simply “trying it on” because they had nothing to lose, the result being soaring numbers of claims with limited chances of success.
Certainly something had to be done, but it was always going to be an controversial issue in relation to which ever measure was going to be introduced to curtail the number of weak claims.
Obviously, it was key to ensure that any new changes to the law would not impinge on the credibility of those claims with merit. However, there is a major question mark over whether this change will produce a significant reduction.
There were 218,100 claims to employment tribunals in 2010-11, a 44 per cent jump on 2008-09. The cost to the taxpayer rose from £77.8 million to £84 million over the same period. The Department for Business, Innovation and Skills estimates that the proposed changes will save businesses £6 million per year and also result in the number of unfair dismissal claims dropping by 2,000 per year. Not a huge number.
Some commentators have suggested the move is unlikely to have a major impact because many claims involve alleged discrimination, matters not limited by employees’ length of service.
Discrimination cases are often more expensive to defend than unfair dismissal. There are also circumstances where a dismissal is automatically unfair even where an employee has not completed a minimum period of service, for example where the employee is pregnant.
Introducing fees will bring employment tribunals into line with civil courts and might also prove a deterrent. But, as with the civil courts, the Government will also continue to fund a system of fee waivers for those who cannot afford to pay. And many claimants take the view they are fighting a matter of principle, not just for themselves but for others in the future.
The reforms have been broadly welcomed by employers.
They argue it is a positive move that will give firms, especially smaller ones, the flexibility and confidence they need to hire.
The trade unions are generally hostile, maintaining it is a green light for workers to be got rid of just before they get their 24 months service under their belts.
Employment Relations Minister Edward Davey argues the reform can only help. “At the moment, if an employer wants to dismiss an employee – and not get taken to court for unfair dismissal – they have to do that within a year and that sometimes ends up with them dismissing someone rather earlier than they would have done.
“By moving the period to two years it will actually give a chance for that employer-employee relationship to develop and to cement, and we think that’s good for jobs.”
I agree with that assessment. At the moment, where employers have decided someone is no good, or their personality does not fit with the business, they tend to act quite quickly ahead of the cut-off. The extra period will allow more thought for both parties and a greater opportunity to find ways of making things work.
In effect, businesses will have a further period of time in which to assess the suitability of employees without triggering unfair dismissal claims.
It is also suggested the change could be of assistance to employers particularly in genuine redundancy situations where they currently need to show that certain procedures have been followed to defeat an unfair dismissal claim – consultation, consideration of suitable alternative employment, fair and objective selection.
This is a huge adjustment to the tribunal system – only time will tell whether it proves for the better or worse.
