Employment law reforms or a retrograde step?

Citation

Rea, L. (2012), "Employment law reforms or a retrograde step?", Strategic Direction, Vol. 28 No. 2. https://doi.org/10.1108/sd.2012.05628baa.002

Employment law reforms or a retrograde step?

Article Type: Corporate Law Outlook From: Strategic Direction, Volume 28, Issue 2

Louise ReaEmployment solicitor, Yorkshire law firm Gordons

After months of speculation, the Chancellor has confirmed that the qualifying period for unfair dismissal claims will be increased from one year to two years from 6 April 2012.

The Government clearly hopes, that this 1980s revival, will be welcomed by employers. However, we suspect that there were few party poppers going off around head offices. For many employers, this will cause more problems than it solves.

The accepted wisdom is that a longer qualifying period will encourage employers to recruit more employees. In other words, employers will feel more comfortable about firing employees. But is this really going to make much difference?

Certainly, the employers we speak to are more concerned about having sufficient employees to drive their business forward whilst still protecting the bottom line. The current high level of unemployment has everything to do with the recession and little to do with employment law.

If employers are honest they will admit to generally knowing within a matter of a few months if a new recruit is not up to scratch. In those circumstances, there is no good reason to wait until the employee has 11 months’ service before taking action. Extending the qualifying period will only encourage employers to postpone the problem for another year.

Often employers are nervous about tackling an employee because of the risk of a discrimination claim. Employees who are pregnant or on long-term sick leave pose particular difficulties. The Government’s hands are tied in respect of discrimination laws. It is difficult to see how the proposed change to unfair dismissal rights will be of any real benefit to employers.

The Government also believes that increasing the qualifying period will cut the number of claims being brought. However, an increase in “special” unfair dismissal claims with no qualifying period and discrimination claims seems inevitable.

These types of cases are more likely to require pre-hearing reviews and case management discussions. This will drive up the complexity and the cost of tribunal litigation for employers. It will also increase the burden on tribunals already struggling to cope.

The second proposal is to introduce fees for claimants bringing proceedings in the Employment Tribunals. This is in principle a welcome and, some may say long overdue, prospect. However, initial details suggest that in the main the Government is intending to adopt a one size fits all strategy.

This means that a claimant pursuing an unlawful deduction from wages claim will pay the same, or a very similar fee, to a claimant pursuing an unfair dismissal claim with a value of up to £30,000.

Although, this has the advantage of simplicity, the sad reality is that unscrupulous employers will get away with withholding small payments due to employees. At the other end of the scale, the fee will not be large enough to put off claimants without sound legal advice from pursuing unmeritorious claims.

It has been confirmed that there will be a complete exemption for those who cannot afford to pay the proposed fees. Employers will already be familiar with claimants pleading abject poverty to get out of paying a deposit to continue with their claim. Unfortunately, this proposal will not prevent the professional timewasters, who will in the main, have no declared income and therefore will still pay nothing.

Cynics will no doubt see these policy changes as a vain attempt to distract attention away from the failure to deliver on the promise to reduce the administrative and legal burdens on employers.

Some commentators have pointed out that the change to the qualifying period for unfair dismissal claims has been proposed mainly because it only requires secondary rather than primary legislation.

Certainly, there are other measures which would be of more practical and immediate help to employers without significantly reducing the protection afforded to the most vulnerable groups of employees.

Many will remember that the old two year qualifying period was challenged during the late 1990s in R v. Secretary of State for Employment ex parte Seymour-Smith and Perez. The House of Lords held that it was indirectly discriminatory against women who were more likely to have shorter periods of service.

However, the Government successfully argued that the two-year qualifying period was objectively justified as it encouraged employers to recruit more employees.

This time around it is young people who may feel the effects most keenly. At a time when youth unemployment is already reaching a record high, coupled with the abolition of the default retirement age meaning jobs are not necessarily being freed up at the other end, this policy seems misguided at best. It will be interesting to see if anyone takes up the challenge on their behalf.

If you wish to discuss this article, or any other employment law issues, please contact Louise Rea on 0113 227 0352 or e-mail: louise.rea@gordonsllp.com

Acknowledgements

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