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Employment Law Reforms

George Osborne has very recently announced changes to rules on unfair dismissal and the tribunal system with the aim of reducing the number of employees bringing claims.

The qualifying period for an unfair dismissal claim will be increased from one year to two years with effect from 1 April 2012.

The announcement also states that fees will be introduced from April 2013 for Claimants who submit a claim to the Employment Tribunal (‘the ET’). It appears as though Claimants will be required to pay an upfront fee of approximately £250 when initially lodging a claim to the ET and a further fee of approximately £1,000 when a hearing has been listed. There has never been any cost associated with filing a claim to the ET before now and the new fee structure is yet to be confirmed.

In addition to these costs, the Claimant may face higher fees if their claim is worth over £30,000. On that basis, a Claimant would need to have a strong belief that their claim has reasonable prospects of success.

If a Claimant is successful, any fees paid to the ET will be refunded, however if they lose, these fees will be forfeited. The forfeit of such fees if successful will be in addition to any legal costs incurred bringing the claim.

The Government have indicated that poor Claimants will not have to pay fees and await more detail on what this actually means and how it will be assessed.

The Government’s intention in introducing the above changes is to make it much less risky for employers, to hire someone without “fears of vexatious claims” by employees to the ET that costs the business time and money defending.

Although the announcement may be seen as a positive step for employers, there is an argument that an increase in the qualifying period deprives many employees of access to justice and that such changes could create a ‘hire and fire’ culture leaving employees vulnerable.

But will this change really reduce the number of claims? Some commentators have said that it will simply bring an increase in discrimination and ‘whistleblowing’ related claims, well founded or not, which can be brought without any length of service requirement. If this occurs it could ultimately defeat the purpose of the Government’s announcement.

The effects of the changes remain to be seen but our advice to employers remains the same in that all employees should be treated fairly regardless of service.

For further information or advice, please contact Jane Sinnamon at jane.sinnamon@collingwoodlegal.com, or telephone Jane on 0191 282 2884.

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