In a controversial speech at the Conservative Party Conference in Manchester, Chancellor George Osborne announced that the qualifying period of employment for unfair dismissal claims is to rise from one year to two years.
The changes, set to come into force on the 1st April 2012, come after months of speculation about the coalition government’s plans to overhaul employment laws.
The move is part of a range of measures proposed in January’s ‘Resolving Workplace Disputes’ consultation which was designed to tackle UK business growth and job creation. According to the Chancellor, the new proposal is forecast to save businesses £6 million per year and will reduce unfair dismissal claims by 2,000 per year. In the past year, 47,900 unfair dismissal claims were lodged with the Tribunals service, which costs £84 million per year to run. Only 39% of claims made it to a full hearing and of those that were successful, the average award for employees was £4,591.
While Mr Osborne hopes that the rise in length of qualifying service will make it “less risky” for businesses to hire people, there is growing concern that employees will try to get round the changes by raising other claims under HR legislation or whistle blowing, where there is no service length requirement. As employees become more aware of their employment rights, it is hard to say whether these changes will actually have the intended effect of reducing claim numbers.
As well as announcing changes to unfair dismissal laws, Mr Osborne also indicated that fees for raising tribunal claims will be introduced from April 2013. The level of fees are set to be the subject of a consultation in November this year, although preliminary reports suggest that the initial fee for raising a claim will be £250 with a further £1,000 payable when the case is listed. It is expected that fees will be refunded for successful claimants and waived for the unemployed or those on low incomes. Mr Osborne claims that the introduction of fees will discourage weak and vexatious claims and will end “the one way bet against small businesses”.