What do George Osborne's proposals mean for you?

What do chancellor George Osborne’s reform proposals for unfair dismissal and the employment tribunal process mean?

George Osborne

This week saw confirmation of Conservative party plans to reform the tribunal process by increasing the qualifying period before unfair dismissal claims can be lodged, and the introduction of a fee system for the first time in an industrial tribunal arena.

For those that can remember, prior to June 1999, the qualifying length of service in order to bring a claim for unfair dismissal was two years. This was reduced by the Labour government, with the result, some may argue, being a spate of litigation in the tribunal.

Is there a benefit increasing qualifying length of service to two years?

The reforms the government are proposing will allegedly give employers confidence and flexibility to recruit in these turbulent economic times, without the fear of employees acquiring rights after 24months and the potential to sue for unfair dismissal. Employment law in this country has often been highly criticised for being weighted in favour of employees and the reforms are said to attempt to redress this balance, but is this really the case?

The Chancellor suggested in his speech that the drive behind the change was to end ‘the one way bet against small businesses’ who are the victims of often burdensome and unmeritorious claims that employees issue immediately after one complete years service. Businesses have in the past known to suffer as result of what the Chancellor called ‘vexatious’ tribunal claims and face insolvency in worst case scenarios. It has also been suggested that the changes will help promote economic growth which has been slower than expected by instilling confidence in employers to recruit new employees and decrease the volume of tribunal claims being lodged by employees as soon as they reach the one year qualification mark.

As expected, small businesses are welcoming the proposals with open arms as they see a future with fewer tribunal claims and more protection in favour of the employer. Unfortunately, employment law experts are concerned that although employees will not have the right to bring claims for ordinary unfair dismissal, they will still have rights to bring claims for which no qualifying length of service is required, such as discrimination and automatic unfair dismissal if it can be shown that the dismissal was connected to a protected ground. It is feared that the route to justice may be exploited by some using these avenues to bring claims causing unprecedented influx of litigation.

Claimant’s to put their money where their claim is

The second proposal is to charge a fee for the first time, to allow claims to be lodged by employees. It has been mooted, although expected to be subject to change, that a fee of £250 will be introduced, payable by employees to lodge a claim in the employment tribunal. This move has been criticised by many who feel that this is an infringement of rights that employees have to air their complaints in a courts where employers are seen to have acted unfairly, and have an independent industrial tribunal make a decision.

Fees will be payable for all claims lodged from April 2013. If a hearing is granted then a further £1,000 will be payable, almost like the current deposit order system which is rarely used. The sum would be repayable if the Claimant was successful in their claims. This will come as a shock to many who may not be in a financial position to spend such sums, which would effectively be limiting their access to justice in a situation where they feel that they have been wronged. Although it is suggested that ‘poor’ claimants would not have to pay, the definition of ‘poor’ is yet to be confirmed!

It is clear that the change, when it takes place will firmly tipped the balance in favour of employer’s rights, which leaves thousands of employees vulnerable in situations where they have been genuinely mistreated and unfairly dismissed. The governments suggestion that it is a measure to protect businesses and also decrease unemployment figures by encouraging new hires has been criticised, and seen by many as a mere attempt by the Conservatives to make their mark on current employment law and assert independence from any European Directive.

Employment law is an area where they can freely make fundamental changes without obstacles faced with EU membership. Time will only tell whether the change will being the results expected, and whether we will see another “U turn” in years to come, with the qualifying service being reduced, for a third time in just over a decade.

If you are an employee and would like advice on unfair dismissal and your current rights, or a business seeking guidance on defending a claim, please contact Ms Kaajal Nathwani, Associate Solicitor at Curwens LLP on 0208 363 4444, or alternatively via email on kaajal.nathwani@curwens.co.uk. Fixed fee packages available, ensuring practical commercial advice.