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Return to two year qualifying period? Smaller employers encouraged to be "brutally honest".

02 November 2010 #Employment

The Government`s "enterprise tsar", Lord Young, has confirmed that he will be consulting over making changes to unfair dismissal law, including the possibility of putting the qualifying period for bringing an unfair dismissal claim back up to 2 years.

This is part of David Cameron`s "brutally honest review" into the burdens on small and medium sized businesses. The qualifying period started out at 6 months in 1971, increased to 12 months in 1980 (2 years for small businesses with 20 or fewer employees), then increased to 2 years for all employees (regardless of the size of the employer) in 1985.  It is 12 months at present, reduced from 2 years in 1999. Lord Young believes that putting the qualifying period up in the 1980s actually increased employment.

Changing the qualifying period could be a step the Government could take quite quickly, requiring only an order from the Employment Minister, Ed Davey, and no Act of Parliament. However, would such a measure make a genuine difference to small and medium sized employers? Or would it be a quick fix?

Now is the time for smaller businesses and entrepreneurs to take up the challenge and be "brutally honest" with the Government. Would changing the qualifying period really help strip away the complexity and red tape of employment legislation? The first point is, such a change would not remove the risk of discrimination claims which smaller employers often more typically fall victim to and inflict the greatest anxiety and legal cost. No qualifying periods apply to such claims. Experience dictates that where employees are unable to bring unfair dismissal claims, they will seek to find a discrimination angle in order to bring a claim, including a whistleblowing claim where there is no qualifying period and no cap on the maximum award.

Arguably smaller employers are not so concerned by routine disciplinary matters or carrying out redundancies. What worries them are the discrimination claims, enshrined in EC law, that can lurk in the background, the lack of faith in the employment tribunal system and fear of the time and cost of dealing with claims supported by "no win, no fee" lawyers. Are employment disputes really that complicated, do we allow them to become complicated and does the system encourage them to be so? The original intention behind employment tribunals was to prevent them from being dominated by lawyers.

Secondly, should large and small employers be treated the same? Surely not. The Coalition Government claims that it will defend the interests of smaller businesses where the majority of jobs ultimately lie. Smaller employers need simplicity and reduced risk in employing staff across the board. Increasing the qualifying period in unfair dismissal cases for smaller employers would be a step in the right direction. However, Lord Young may consider imposing ceilings on discrimination and unfair dismissal awards or simple codes of practice applicable to small employers that encourage small employers to go to tribunal rather than have to settle and, importantly, to employ staff in the first place.

So, let us have your views on what should be done. Governments have attempted before to cut the red tape of employment law but failed. The present Government review is encouraging for smaller employers but a genuinely radical outcome will not come about unless it is recognised that piecemeal change will make little difference to "compensation culture".

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 by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.
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