Employees will have to pay to get an Unfair Dismissal hearing

The Government has confirmed that it intends to make significant amendments to the rules regarding unfair dismissals. The changes would mean extending the qualifying period to claim unfair dismissal from one to two years and the introduction of fees in order to lodge a claim with the Tribunals Service. Announcing the measures, Vince Cable, the Secretary of State for Business, Innovation and Skills, made the following statement.

"We have one of the most flexible labour markets in the world but there is more we can do to give British business the confidence it needs to create more jobs and support the wider economy to grow. Businesses tell us that unfair dismissal rules are a major barrier to taking on more people. So today we have announced that only after working for the same employer for two years can an employee bring an unfair dismissal claim."

The measures follow a consultation entitled 'Resolving Workplace Disputes' and are part of the Government's drive to reduce the burden of regulation and red tape on employers. The two main points of this announcement are;

• the qualifying period to claim unfair dismissal will be extended to two years from 1 April 2012; and
• in order to lodge a claim for unfair dismissal a claimant must pay an initial fee of £250 and a further fee of £1,000 to arrange a hearing.

Whilst the announcement has been greeted warmly by many organisations representing the business community, there has been an angry response from trade unions and other organisations claiming that 3 million people could be left unprotected by the new rules.

The Government believes that the measures could result in 2,000 fewer unfair dismissal cases being brought before a tribunal in the year following the rule change. There were 49,600 cases heard in the year 2010-11. It is argued that this could save millions of pounds for employers and help to improve the efficiency of the tribunals service.

However, trade unions and some employment lawyers have argued that not only may the extension of the qualifying period be unfair but that it may also prove to be counter-productive.

One of the reasons that the qualifying period was shortened to one year was that the original two year deadline was held to be indirect sex discrimination as it mostly disadvantaged women. Since that change new laws on age discrimination have been introduced and there is an argument to suggest that an extension in the qualifying period may now indirectly discriminate against younger workers.

Other concerns raised include the fear that some employers could simply use the extended period to get more out of employees before dismissing them to keep wage costs to a minimum. However, employers could also risk damaging their business by using the extended period to persevere with under-performing staff who may otherwise have been dismissed.

The current exemptions to the qualifying period will remain. For example, it will still be unlawful to dismiss someone for whistle-blowing or on the basis of discrimination, even if they have been employed for less that two years.

The Government also insists that the introduction of a 'lodging fee' for unfair dismissal claims will particularly reduce the number of 'vexacious' and inappropriate claims brought and thus further reduce costs for employers.

The fees are not insignificant and will need to be paid by employees at a time when they may have least money at their disposal. The initial lodging of a claim will cost £250 and then there will be a fee of £1,000 to arrange a hearing although this fee will increase if the claim is for more than £30,000. As the average claim at a tribunal is £4,000 then fees of almost a third of this amount may prove to be a barrier to justice for some.

If successful, the fees will be reimbursed to the claimant by the Ministry of Justice. If not successful then the fees will be forfeited. If a claim is settled between the parties, then the burden of repaying the fees is likely to be borne by the employer. As 95 per cent of claims are settled this could prove to be either an additional financial burden or in some cases an obstacle to reaching a settlement.

Further consultations are to take place on how the fees will be implemented but the Government has announced that they will come into force in December 2013.

The prospects of seeing the right to claim unfair dismissal being abolished altogether and replaced with a non-fault compensation scheme seem to be receding. The idea was proposed in a report by the financier Adrian Beecroft for the Prime Minister but strong opposition from within the coalition makes the implementation of such a proposal highly unlikely.

The Essentials of Employment Law is a one-day seminar presented by UK Training which clearly explains, amongst a comprehensive list of other topics, how the current rules regarding unfair dismissal and employment tribunal claims should be implemented. See this page for more details.

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