Andrew Browning, associate at law firm Thomas Eggar, considers the implications of suggested employment law alterations for employers.
The Chancellor, George Osborne, announced in October that in an effort to reduce the number of employment tribunal claims being made and “red tape” for employers, the qualifying period that an employee must work for their employer before being able to claim unfair dismissal would increase from one year to two years and that there would be a requirement for the Claimant to pay a fee when making a claim to the employment tribunal. Trade unions cried foul over these changes but how beneficial will they be to manufacturers?
Unfair dismissal
The increase of the qualifying period is likely to be welcomed by a majority of manufacturers as it gives more control back to the employer. But will this reduce the number of unfair dismissal claims being made in reality, since many employees in the industry have far more than 2 year service.
In addition, the benefits of this change could be hampered by the fact that there is no qualifying period for employees making claims of discrimination. Former employees regularly make claims that their dismissal was an act of discrimination (on the grounds of race, disability, gender etc). The lack of a qualifying period for discrimination claims means that such claims can still be made. The government is unable to introduce any qualifying period for discrimination claims as these are derived from European Directives.
In fact, there has already been a drop in the number of unfair dismissal claims made to the Employment Tribunal from 57,400 in 2009/2010 to 47,900 in 2010/2011. These statistics could indicate that employers have become more careful to remain complaint with official dismissal procedures. Arguably the best way to avoid a claim of unfair dismissal is for a manufacturer to have clear dismissal procedures in place, and to follow these rigorously when considering whether or not to dismiss an employee. Transparency of such rigour will discourage unfounded claims.
Employment tribunal fees
It is understood, although not confirmed, that the fee for lodging an employment tribunal claim will be in the region of £250 with a further £1,000 fee that will also be payable by the claimant when the claim is listed for a hearing. These fees will be repaid if the claimant is successful. It is also thought that claimants who have no income will not have to pay the fees.
It is difficult to dispute that a fee will make potential litigants think carefully before making a claim to the tribunal. Further, the £1,000 listing fee may encourage early settlement of a claim before the matter is listed for hearing.
However, the exemption from paying fees by claimants who have no income may render the deterrent nature of the fee impotent. It is hardly beyond the bounds of credibility that someone who is making a claim of unfair dismissal will not have a job at the time that they make a claim, and so will be exempt.
It has been argued that tribunal fees will prevent vexatious litigants. The problem with this argument is that vexatious litigants by their very nature can be particularly determined to “see their former employer in court” no matter what the cost. While the potential tribunal fees may be a significant expense, often these types of litigants will find a way to pay as their sole intention is to make life as difficult as possible for their former employer.
Tribunal fees will in all likelihood reduce the number of claims being made but perhaps not to the extent government hopes.
Conclusion
The increase in the qualifying period to claim unfair dismissal and the introduction of tribunal fees is probably going to reduce the number of claims made to the Employment tribunal. It is, however, open to debate as to how significant this reduction will be.
Importantly, from an employer point of view, these changes do not deal with the expense that is incurred by the employer in terms of legal fees and loss of management and staff time when a claim is made.
