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Significant proposals for employment law reforms announced

Nov 01, 2011

The announcement at the recent Conservative Party Conference by Business Secretary Vince Cable and Chancellor George Osborne that the qualification period for the right to claim unfair dismissal is to be extended from one to two years and the introduction of fees for bringing Employment Tribunal claims has certainly generated a great deal of media interest. The reaction to the announcement has been mixed though. The CBI welcome the increase in the qualifying period as ‘a very positive step’ but many organisations are not convinced that the change in the qualifying period will reduce the number of Employment Tribunal claims or act as an incentive to recruit new staff and boost economic growth.

Changes to the unfair dismissal rules follow the ‘Resolving Workplace Disputes’ consultation published in January this year which also proposed measures to encourage early resolution of disputes, the speeding up of the Employment Tribunal process and measures to tackle weak and vexatious claims.

The new legislation regarding the increase in the qualifying period will come into force on 6 April 2012. The proposals are expected to save British business nearly £6 million a year and should see the number of unfair dismissal claims drop by around 2,000 a year. Interestingly, in the consultation paper, the government stated that extending the qualifying period for unfair dismissal would reduce the number of claims by between 3,700 to 4,700 claims a year so there has already been a significant adjustment by the government in the expected impact of the proposal. With 218,100 Employment Tribunal claims made in the period 1 April 2010 to 31 March 2011 the anticipated reduction in 2,000 claims a year is not particularly significant taking into account the total number of claims that are brought. Don’t forget that there are a number of ‘day 1′ rights for which no qualifying period is necessary and there may well be in increase in the number of discrimination claims brought instead as our experience is that employees who are unable to bring claims of unfair dismissal because they don’t meet the qualifying period often bring other claims such as discrimination. These can often be more complex and costly to deal with.

The qualifying period for bringing an unfair dismissal claim has varied over the years from just six months continuous employment which was then increased to one year, then to two years and reduced back to one year in 1997. These changes have had, in our view, relatively little impact in reducing the number of claims.

The introduction of fees from April 2013 is a potentially more significant development and likely to have a far greater impact on the number of claims that are brought than the increase in the qualifying period. Details regarding the fee structure are awaited but from initial information, it appears there will be an upfront fee of £250 to be paid when the claim is first lodged and a further fee of £1,000 payable by the claimant when the hearing is listed. These fees will be refunded if the claimant wins and forfeited if they lose. However, the government has stated that ‘poor claimants’ will not have to pay and it is possible that somebody unemployed and in receipt of benefits will be exempt from paying the fees. The details of this exemption are awaited with interest. It may be the case that many employees will fall within this exemption given that their employment will have ended and they may have no income coming in.

The recent announcement coincided with the next stage of the government’s Red Tape Challenge which was launched by the government in April 2011.

For three weeks in October 2011 the Challenge  focused on employment related law;  the purpose being to seek views on how employment related regulations can be improved and simplified. There were four categories being considered:

  • Compliance and enforcement
  • Letting people go
  • Managing staff
  • Taking people on

Examples of the legislation on which the government has sought views include the rules on collective redundancies, employment agencies, immigration checks, the national minimum wage and statutory sick pay:

This article is © Morgan Cole and may not be reproduced without our express permission. Recipients may forward this article and view, print and download the contents for personal use only. The contents must not be used for any commercial purposes and the material in this article or any part of it is not to be incorporated or distributed in any work or in any publication in any form without the prior written consent of Morgan Cole LLP. Professional advice should always be sought where you require assistance in specific areas of the law. No responsibility can be accepted for any action based on this article


By Debra Gers, Associate Solicitor, Morgan Cole; a law firm that specialises in representing and advising schools across the wide range of legal issues they face. 



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