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.