News just in from the Department for Business Innovation and Skills (BIS) that the Government intends to increase the minimum length of service for ordinary unfair dismissal claims back up to two years in April next year.
This is with a view to “a saving to British industry of around £6million”, and is intended to be part of a whole package of steps designed to cut employment red tape and encourage businesses to take on more new hires by cutting the number of unfair dismissal claims “by around 2,000 each year”.
Not only does the BIS press release contain a grammatical error as early as in its own title, but sadly it has also many other hall-marks of a rushed job. When first issued yesterday, the release referred to an implementation date of 1 April but within hours, possibly fearing the gigantic hostage to fortune implicit in making legislative changes on April Fool’s Day, it had changed to 6th. The grammatical error remains. Saving £6million by knocking out 2,000 unfair dismissal claims suggests such claims to cost on average £3,000 each, presumably including legal costs, which cannot be accurate. The figures contain no apparent regard to the inevitability that those denied recourse through an unfair dismissal claim will simply issue proceedings for discrimination and/or whistleblowing instead. These are both heads of claim which can be far costlier and more convoluted to defend than a boggo unfair dismissal claim. Moreover, as soon as BIS floated this proposal in its “Resolving Workplace Disputes” consultation paper in January 2011, the trade union movement leapt as one to the barricades to pledge opposition to it, so some degree of industrial unrest has to be factored into the equation also.
The unfair dismissal qualifying period was reduced from two years to one in 1999 after that minimum threshold was found to be indirectly discriminatory because more women than men lacked two years’ service at any given point. However, it was found that the two year minimum period could just about be justified as a proportionate means of achieving the unquestionably legitimate aim of allowing employers a reasonable period to form a view about an employee without being bound to formal procedures and compensation claims if that view turned out to be less than positive. It remains to be seen whether the demographic statistics have changed so as to undermine that indirect discrimination argument. The probability is that they have. In 1991 for every 10 men who satisfied the 2 year rule, only 9 woman did. By 1998 that was 9.5. As the 1991 statistics were described by the House of Lords as “borderline”, the improvement since then seems likely to dispose of any argument based on adverse impact on women.
However, if those statistics have suffered any form of reversal as a result of the recession, then the increased two year period seems vulnerable to challenge on the same grounds again – nowhere else in Europe requires employees to wait so long without a meaningful avenue of recourse in the case of an undeserved termination. Moreover, an employer whose senior management still remain undecided about an employee a full eleven months after he joined (or at least lack the wit to dismiss him at that point if really still in doubt) has got altogether bigger problems than a possible occasional trip to the local Tribunal!
Sadly this BIS measure runs the traditional risk of the cheap political gesture, i.e. of costing a great deal to achieve almost nothing. It would be far better for the Government to focus upon alternative dispute resolution (mediation), “neutralising” the burden of proof in discrimination cases so far as practicable and stiffening up the Employment Tribunal’s costs powers to make them a real deterrent to spurious claims, than to deny deserving employees in a hard market a hope of compensation for so long.
