The Government has said that it is considering increasing the continuous service requirement for unfair dismissal claims from one year to two years. This is potentially good news for employers and designed to relieve the burden on them during the difficult economic times. It may also ease the burden on our over stretched Employment Tribunal service. However, there are concerns that it could encourage a ‘short term’ approach by businesses.
There are already exemptions to the 1-year qualifying period ( for claims involving discrimination, whistle blowing, health and safety, employee representation issues, and several other statutory exemptions). It is probably safe to assume that these exemptions would remain if the new 2-year qualifying period was introduced. Even so, careful consideration needs to be given to the potential effect of increasing the qualifying period. Employment law treads a very difficult line trying to balance what can be seen as conflicting interests, the need of employees to be protected and of employers to have the freedom to run their businesses as they wish.
Had the ACAS Code not replaced the statutory dismissal and disciplinary procedures then a 2 year qualifying period of unfair dismissal claims would seem more justified. Now that this significant burden has been removed from employers it seems questionable to extend the period at a time when many employees are being forced to seek new employment. Nowadays, particularly in the current economic conditions, 2 years can be a long time in a career. Many people move jobs every 2-3 years, the days of a job for life are well and truly gone. This portion of the workforce would have little or no protection from unfair dismissal unless they came under one of the exemptions. And I suspect, that were the 2 year qualifying period to be introduced, we’d see more claims based on the exemptions. Such claims tend to be more costly, time consuming, emotive and pose greater reputational threats than a simple unfair dismissal claim. Even were employers to win such claims, the time and trouble involved would be likely to be significant.
Further, were the unfair dismissal qualifying period to be raised to 2 years, it could undermine the need for a fair redundancy process (selecting employees on objective criteria) and that may not be in an employer’s best interests. In difficult times, businesses need to keep their best people. But if the legal advice is that the process can be handled more safely by dismissing those with short service, it may encourage employers to take a short term approach. This will be unhelpful to their business, and to our economy in the long term. Such an approach could also discourage investment in staff until after they have reached the two year marker.
The Government has also been putting a lot of emphasis on guidance and best practice. If staff of up to two years service are seen as ‘disposable’ then employers have less incentive to get appropriate and fair disciplinary and dismissal procedures in place. And this can backfire, not just in a case where employees have greater than the 2 years service, but also if an employer is unaware that an employee comes under one of the exemptions.
So, while increasing the qualifying period for claiming unfair dismissal may look like good news, if it happens, employers should still be very careful in their decisions to dismiss. It is vital that they carefully consider whether or not a ‘short term’ approach will actually be the best thing for their business.