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All change for unfair dismissal

The introduction of a two year rule for employees to qualify for unfair dismissal rights is part of a package of reforms to shake up employment law. Though change is welcome, Polly Jeanneret, Employment and HR Advisor at Halebury, warns that the legal framework should continue to be handled with care.

They usually say that no news is good news, but when it comes to the Government’s employment law reforms, employers may feel that lots of news is very good news. As of 6 April, the Department of Business, Innovation and Skills has introduced new rules on unfair dismissal and announced it is looking into a number of other employer-minded reforms. The new unfair dismissal rules mean employees must have a minimum of two years’ service to be able to claim unfair dismissal. That new rule alone would have probably satisfied many employers but the government is throwing in lots of other bits and pieces too such as a ‘call for evidence’ (a precursor to a consultation) on introducing a compensated no-fault dismissal where employers would be able to legally pay off an employee they wanted to let go without having to give a reason; and the Government is even daring to grapple with the octopus-like laws relating to TUPE.

But is it all ‘good news’? In particular, will the new ‘two-year rule’ actually make much difference? New laws often have a funny way of not working out quite how Government planned it and there is much that remains unchanged in UK employment law of which employers must be aware. Certainly, there is reason for employers to cheer in extending the period during which an employer can ‘get to know’ an employee and decide whether or not to keep them on. Indeed, some employees will come and go of their own volition over a two-year period (particularly the restless generation z). Also, having a two-year grace period will give employers the chance to have had at least one annual review with a new employee if not two.

However, there are plenty of other employment-related laws which do kick in way before the employee’s second anniversary (actually before the employee walks through the door), namely discrimination laws. It could be one of those unintended consequences of the changes that more discrimination claims are brought against employers in the absence of unfair dismissal protections. If one considers the various protected characteristics set out in the Equality Act 2010 (not to be discriminated against on the grounds of religion, age, disability and so on), well, there’s something for everyone isn’t there? Second, as with all rules there are exceptions and there are instances where the two-year rule will not apply if an employee can show, for instance, that they have been dismissed for blowing the whistle, or if they can prove that the dismissal was actually connected to a pregnancy or to being part- time and so on.

The other problem with the new employment changes is it may give operational managers the sense that they are ‘free’ from the constraints of law – and of HR. They have read all about the new rules in the press and may feel they have carte blanche to fire at will. It would be a shame if all the good work which HR has done and continues to do in creating a culture where managers are taught to monitor performance, tackle issues of misconduct through proper channels, is thrown out of the window. And a cynic would also say that an awkward employee, the one who seems to thrive on causing a headache will still cause a headache regardless of the two year rule.

In any event, it will take some time for the new rule to have effect because it only applies to members of staff who are employed after 6th April 2012. Anyone already employed will have protection from one year under the old rules. Also on 6th April, the Government introduced other changes relating to tribunals. First, for those unfair dismissal cases which do make it to tribunal, they will be heard by judges on their own without the wing members. This should speed up the tribunal process and avoid part-heard cases. This has a knock-on effect on legal costs in defending a claim. Plus the maximum costs order which a tribunal can award against a party bringing an unmeritorious claim has now doubled to £20,000.

This should act as a serious deterrent to claimants (though often they are not made aware of potential cost orders before the Hearing or by the Tribunal at the beginning of a Hearing and so there is no real opportunity to deter them). So although it would seem at first glance that employers can afford to relax their vigilance of employment law, this is simply not the case: as with all change, re-education and training on what the new rules mean is part and parcel of sound risk management going forward.

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