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Double or nothing

01 March 2012 #Employment


Normally, at this time of year, employers would be busily introducing policies and procedures to meet new statutory obligations coming into force on 6th April.  However, this year, it appears that the tables have turned in favour of employers.

The Government is passing over enhancements in employment rights and has decided to back new rules for unfair dismissal with a reduction in employment protection on the cards. The bold move is a bid to win the confidence of employers and stimulate economic growth. Will the gamble pay off? 

The Government’s response to the consultation on “Resolving Workplace Disputes” was published in November 2011 in which the Government confirms a number of steps that it intends to take to encourage the early resolution of disputes and to make the tribunal system more efficient and effective when used. (See Ghost of Christmas Future for a full list of the changes that can be expected and follow changes with our case and legislation tracker available here.) Draft legislation has now been published, which, subject to parliamentary approval, will see the first of these measures being introduced next month.

Currently, employees must have at least one year’s service to qualify for the right to bring an ordinary unfair dismissal claim and to be entitled to a written statement setting out the reasons for their dismissal, which may be used in evidence in any proceedings. Under the Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order 2012 the minimum qualifying period of service for both will be doubled to two years for all new entrants starting employment on or after 6th April 2012.  Employees employed prior to this date will not lose out by the change and will still have protection after completing one year’s service as now.

The Government estimates that the extension to the qualifying period will result in between 1,600 and 2,400 fewer unfair dismissal claims each year, a reduction of between 3 -5%, easing the pressure on the heavily burdened tribunal system.  However, commentators speculate that any gains will be offset by rising claims in other areas as employees will endeavour to play the system and use other avenues to sue. In particular, employees do not, and will not, need any length of service to bring discrimination claims or for unfair dismissal where the reason for dismissal (or selection for redundancy) falls within one of the categories deemed automatically unfair. This includes, but is not limited to, dismissals relating to: 

  • membership or non-membership of a union or participation in union activities;
  • health and safety;
  • the assertion of certain statutory rights or a claim that these rights have been infringed (this includes rights to paid holiday, the minimum wage or unlawful deduction from wages);
  • the employee making a protected disclosure e.g. whistleblowing;
  • pregnancy or maternity, paternity, parental or adoption leave;
  • time off for dependants or a request to work flexibly.

Given these additional risks are present, it remains to be seen if the economy does emerge as a winner depending on whether, as the Government believes, the extension to the qualifying period pays off by increasing confidence among employers to recruit and retain staff. Based on some of the consultation responses received, the Government’s view is that the current qualifying period of one year is acting as a barrier to employment, particularly for small business. In some cases, it is felt that a year is not always long enough to evaluate performance properly and actually encourages employers to act hastily before the year is up by dismissing employees who, had they been given more time, may have reached a satisfactory level of performance. The two year aims to address this and strike a better balance between the interests of both parties.

As mentioned there are going to be risks, both now and in the future, and employers do need to act cautiously when dismissing employees during any probationary period or at a time when they have no unfair dismissal protection. Employers should always ensure that they have a fair reason and follow a fair procedure. Disciplinary and capability policies are designed to ensure that all employees are treated fairly and consistently. Taking short cuts may result in the opposite effect, increasing the risk of a discrimination claim and the chances of higher compensation. At the very least, it is better to follow simplified procedures, rather than exclude employees from due process altogether but any departure from the ACAS Code of Practice should only be undertaken if it is reasonable to do so.

Given the reality of the situation, employers who need assurances that they will not end up in a tribunal when an employee is dismissed have one option – to enter into a valid compromise agreement to settle any and all existing or potential claims. To this end, the Equality Act 2010 (Amendment) Order 2012 is also expected to come into force on 6th April to allay present concerns that have been voiced in this area. The Order amends the wording of the Equality Act 2010 to clarify that a solicitor negotiating exit terms or bringing a claim on an employee`s behalf can also be their "independent adviser" for the purposes of a compromise agreement. It is always good to finish on a positive note and under these arrangements the employment relationship can end in a win-win situation.  

Should you need advice on any of these changes or on terminating an employment relationship under a compromise agreement, feel free to contact us on 0118 953 3955 or email contact@employmentbuddy.com.

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at employmentunit@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.

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