by Laurie Anstis on November 1, 2010
Vincent Moss, Political Editor of the Sunday Mirror, reported this weekend that David Cameron was intending to increase the length of service necessary to qualify for the right not to be unfairly dismissed from one to two years.
The report cited only “leaked government plans” as evidence for this, but what if the government really was planning to increase the qualifying period for unfair dismissal?
The reported new qualifying period of service of two years has actually been the norm for most of the existence of unfair dismissal law. It was only in 1999 that the qualifying period was reduced to one year. It had previously been two years. [Update – see comment from Mrs Markleham below.]
Until the mid-1990s there was also a special qualifying period for part-time employees (defined as those working under 16 hours a week) of five years. This was successfully challenged as amounting to indirect sex discrimination in R v Secretary of State for Employment, ex parte Equal Opportunities Commission  IRLR 176, and there is no suggestion in the report that the previous distinction between full time and part-time workers either would or could be revived.
The two year limit was itself unsuccessfully challenged on grounds of indirect sex discrimination (the argument being that women tended to have shorter service than men) in the case of R v. Secretary of State for Employment ex parte Seymour-Smith and Perez (No.2)  IRLR 263. While accepting that the two year qualifying period did have a disparate impact between men and women, the House of Lords concluded that there was objective justification for the two year qualifying period. However, by that time the government had already committed to a reduction to one year – one of the first pieces of employment legislation of the new Labour administration lead by Tony Blair.
The Conservation-Lib Dem coalition committed in its first budget (pdf, para 1.67) to require each government department to review the employment legislation for which it was responsible “to ensure maximum flexibility, protect fairness and promote competitiveness“.
So far, the government’s employment law program has seen the implementation of the Equality Act, a proposal to abolish the default retirement age and a commitment to implement the Agency Workers Regulations without amendment. Many employers would see this as an increase, rather than a decrease, in regulation, and with that in mind it is hardly surprising that the qualification period for unfair dismissal rights might have attracted the government’s attention. To increase the qualifying period would be an eye-catching measure that would be perceived as business-friendly. It is also significant that the basic unfair dismissal rules remain a purely domestic measure that is not bound by EU regulations in the same way as, say, discrimination law is. The influence of EU law in the field of employment law leaves only limited scope for deregulation in domestic legislation.
If the government is looking for a headline business-friendly measure, it might be said that they would be better off reducing the maximum award for unfair dismissal. Any such reduction could be presented as continuing to protect lower and middle-income employees (whose awards would rarely reach the current maximum) while limiting the awards available to “fat cat” higher earners. However, this may not be so easy to achieve. Darren Newman says that a change in the qualifying period could be made by secondary legislation but a change to the maximum compensatory award only made by the more laborious primary legislation process.
What if the government did increase the qualifying period? What would the consequences be? Here are some suggestions:
1. There would be a decrease in the number of basic unfair dismissal claims brought to the tribunal. The increase in the qualifying period would put off employees (particularly those who are acting in person) with between one and two years service from bring unfair dismissal claims.
2. There would be an increase in the number of “special” unfair dismissal claims and discrimination claims brought to the tribunal. Claimant representatives are already highly creative in seeking to make their client’s claims fit within the “special” categories of unfair dismissal (such as dismissal for whistleblowing), or presenting them as discrimination claims, neither of which require any qualifying period. Such claims tend, by their very nature, to be more contentious. If basic unfair dismissal claims are replaced by special unfair dismissal and discrimination claims then in practice this is going to be more difficult for employers despite the apparent deregulation.
3. Employees with less than two years service will be more vulnerable in restructuring and redundancy exercises (including likely public sector redundancies).
4. Employers may become less rigorous in their employment practices. If an employee can be dismissed with minimal formality within the first two years of their employment, there may be less of an imperative for busy employers to address problems or underperformance at an early stage.
5. The stark prospect for employees with under two years service is that they could end up being unfairly dismissed without having any entitlement to compensation or judicial recourse.
I would love to hear from commenters whether you think the government really looking at this and, if these plans are implemented, what would the consequences would be.
(See also Michael Scutt’s blogpost on this subject.)