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Proposed changes to law on unfair dismissal

31st October 2011

During the Conservative Party conference the Chancellor, George Osborne, announced a couple of significant changes to the law on unfair dismissal. 

The first change is an extension to the qualifying period of employment that an employee has to work before being protected against unfair dismissal from 1 year to 2 years. It has been proposed that this change will take effect in April 2012. This would be taking the position to the way it had been before 1999. The Government claims that the increase in the qualifying period of employment from 1 year to 2 years would have the effect of reducing the number of claims of unfair dismissal each year by approximately 2,000.

The second change announced is the introduction of fees for Claimants in the Employment Tribunal. At the moment there is no fee charged on issuing a claim in the Employment Tribunal. The balancing postition here is the fact that each side (including the Claimant) is expected to have to pay any legal costs they incur in the proceedings, whether they win or lose the case (the Tribunal does have the power to make costs orders, but they are still very much the exception to the rule). Initial suggestions are that there should be a fee of £250 when starting the claim, a further fee of £1,000 when the case is listed, with fees being refunded if the Claimant wins the case, and forfeited if the Claimant loses. The propsal is that the fees be introduced in April 2013.

If these figures are implemented they will be much greater than the cost of issuing a claim in the Small Claims Court ( which does appear very difficult to justify). There is also the possibility that there will be fee exemptions if the Claimant has low income. The fact is of course that many Claimants have a very low income at the point they start a claim in the Employment Tribunal (obviious really when you consider that they are usually bringing a claim because they are out of work after having been dismissed!). Introducing a distinct fee on the case being set for a hearing will also oppresive if the Employment Tribunals continue their current approach of setting the case for a hearing almost immediately on receiving the Claim Form. This would mean that the real issue cost would be £1,250, rather than £250.

No doubt the Government thinks that these proposals will reduce the number of claims to the Employment Tribunal. However we suspect that this is a simplistic assessment. Firstly on the subject of the qualifying period for unfair dismissal  this change is likely to result in an increase in the number of claims of unlawful discrimination (for which there is no qualifying period of employment required before the individual is able to bring such a claim). It should also be noted that the relative proportion of claims of unfair dismissal by employees with between 1 and 2 years service is low. We also take the view that one effect of introducing issuing fees in the Tribunal will be an increase in the number of applications for and granting of costs orders. We also believe that these changes will make it even harder than normal to achieve a settlement of a claim, as the Claimant will always try to recover the issuing fee (and any other fee) within the settlement; thereby increasing the settlement costs incurred by the former employer.  

Hallett Employment Law Services Ltd can provide you with advice on the practical effect of the issues raised in this article.         

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