UK: Changes To Unfair Dismissal Legislation – An Employers Benefit?

Last Updated: 17 May 2012
Article by Andrew Browning

The Chancellor, George Osborne, announced in October 2011 that in an effort to reduce the number of employment tribunal claims being made and "red tape" for employers, the qualifying period that an employee must work for their employer before being able to make a claim of unfair dismissal would be increased from one year to two years, and that there would be a requirement for the Claimant to pay a fee when making a claim to the employment tribunal. Trade unions cried foul over these changes; however, how beneficial will they be to employers?

Unfair dismissal

The increase of the qualifying period from one year to two years before an employee can make a claim of unfair dismissal is likely to be welcomed by a majority of employers. In the 2011 Chamber of Commerce Workforce Survey, 54% of the businesses surveyed said that they found the regulations relating to dismissal of employees either extremely burdensome (30%) or fairly burdensome (24%).

By increasing the qualifying period businesses will have a longer period within which they can dismiss an employee without risking a claim of unfair dismissal.

This clearly gives more control back to the employer; however, would this reduce the number of unfair dismissal claims that will be made?

Unfortunately, the Employment Tribunal and Employment Appeal Tribunal (EAT) statistics supplied by the Ministry of Justice for 2010-2011 do not provide a breakdown that shows the length of service of those who make claims of unfair dismissal. It could therefore be the case that increasing the qualifying period will not actually have a significant impact on the number of claims of unfair dismissal, as there would be plenty of employees with over 2 years service who could still claim.

The benefits of this change could be hampered by the fact that there is no qualifying period for employees to make claims of discrimination.

Former employees regularly make claims that their dismissal was an act of discrimination (on the grounds of race, disability, gender etc). The lack of a qualifying period for discrimination claims means that such claims can still be made. The government is also unable to introduce any such qualifying period for discrimination claims as these are derived from European Directives.

There has actually already been a drop in the number of unfair dismissal claims made to the Employment Tribunal from 57,400 in 2009/2010 to 47,900 in 2010/2011. These statistics could indicate that increasingly employers are dismissing people in a correct manner. Arguably the best way to avoid a claim of unfair dismissal is for an employer to have clear dismissal procedures in place, and to follow these when considering whether or not to dismiss an employee rather than relying on the changes to unfair dismissal legislation.

Employment tribunal fees

It is understood, although not confirmed, that the fee for lodging an employment tribunal claim will be in the region of £250 with a further £1,000 fee that will also be payable by the claimant when the claim is listed for a hearing. These fees will be repaid if the claimant is successful. It is also thought that claimant's who have no income will not have to pay the fees.

It is difficult to dispute that a fee will make potential litigants think carefully before making a claim to the tribunal. Further, the £1,000 listing fee may encourage early settlement of a claim before the matter is listed for hearing. However, the exemption from paying fees by claimants who have no income may render the deterrent nature of the fee impotent. It is not beyond the bounds of credibility that someone who is making a claim of unfair dismissal will not have a job at the time that they make a claim, and so will be exempt from paying a fee meaning that tribunal claims will still be able to be lodged with relative ease by many claimants.

It has been argued that tribunal fees will prevent vexatious litigants. The problem with this argument is that vexatious litigants by their very nature can be particularly determined to "see their former employer in court" no matter what the cost. While the potential tribunal fees may be a significant expense, often these types of litigants will find a way to pay as their sole intention is to make life as difficult as possible for their former employer.

It is likely that the effectiveness of the fees as a deterrent will be dependant on the level of the fees and to whom the exemption on paying fees will apply. Tribunal fees will in all likelihood reduce the number of claims being made but perhaps by not as many as the government hopes.

Conclusion

The increase in the qualifying period to claim unfair dismissal and the introduction of tribunal fees is probably going to reduce the number of claims made to the Employment tribunal. It is however open to debate as to how significant this reduction will be.

These changes also do not deal with the expense that is incurred by the employer in terms of legal fees and loss of management and staff time when a claim is made.

It is questionable whether these changes will significantly reduce the "red tape" that employers face in terms of employing people.

In the 2011 Chamber of Commerce Workforce Survey 53% of the employers surveyed said that they found Health and Safety regulations extremely burdensome (24%) or fairly burdensome (29%). In the same survey 53% of employers stated that they felt the new provisions giving fathers additional paternity leave was detrimental to the business and 32% felt the same about the right to request flexible working.

Employers have also regularly complained that the provisions relating to maternity leave are especially onerous.

It is unlikely that these provisions are going to be removed at any time in the near future and so changes to unfair dismissal legislation and the introduction of tribunal fees are probably going to be viewed as only a small drop in the ocean of employment legislation.

Thomas Eggar LLP is a limited liability partnership registered in England and Wales under registered number OC326278 whose registered office is at The Corn Exchange, Baffin's Lane, Chichester, West Sussex, PO19 1GE (VAT number 991259583). The word 'partner' refers to a member of the LLP, or an employee or consultant with equivalent standing and qualifications. A list of the members of the LLP is displayed at the above address, together with a list of those non-members who are designated as partners. Regulated by the Solicitors Regulation Authority. Lexcel and Investors in People accredited.

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The contents of this article are intended as guidelines for clients and other readers. It is not a substitute for considered advice on specific issues. Consequently, we cannot accept any responsibility for this information or for any errors or omissions.

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