David Cameron’s plans to reform the Tribunal system by making it easier to dismiss staff in the first two years of their employment sound sensible. However, could it backfire and actually end up costing you more in Tribunal claims?
You’ll no doubt be aware that an employee can bring a claim for unfair dismissal against you after a year of continuous employment, but the Government’s proposal is to extend this to two years in order to give you additional time to assess staff before they gain protection from unfair dismissal.
But in my view this proposal might encourage people to ‘shift the focus’ of a claim to discrimination and other claims, which could be financially damaging as unlike unfair dismissal claims, compensation payouts in some of these claims can be uncapped. Whilst you may welcome a relaxation in the requirement to follow a ‘fair procedure’ before dismissing employees in the first two years of employment, without such a procedure to demonstrate a genuine (non-discriminatory) reason for dismissal, you may struggle to defend yourself against such claims.
In fact in some respects this proposed legislation is actually going backwards as, some years ago, the qualification period of an unfair dismissal claim was two years and the ‘two year requirement’ was subject to a legal challenge on the basis that it discriminated against women (as they were less likely to remain with one company for long periods due to childcare commitments and other domestic responsibilities). If the Government’s proposals go ahead then it is likely the two year requirement will be challenged once more on the ground of sex discrimination and also age discrimination.
To act as a deterrent to dismissed workers bringing ‘vexatious claims’, the government has talked about charging people a fee in order to lodge Tribunal claims. From conversations with my clients this would be very welcome but, unfortunately, the idea has been shelved for the moment with a mere proposal that it is discussed again in the spring.
Further news which might disappoint you is that, at the other end of proceedings, the Government is proposing to levy a fine (payable to the treasury) on employers who are found guilty of breaching employment laws.
I believe the Government are genuinely trying to make it easier to dismiss employees who are not up to the job and by doing so, encourage businesses to recruit, knowing that they are not taking such a big risk on new employees. And anything to help you take a more flexible approach employment can only encourage economic growth.
However, I feel there is a real danger of this proposal backfiring and, rather than reducing unfair dismissal cases, it will increase the number of cases built on allegations of discrimination which are more complex and can be more expensive to defend.
Even without the proposed changes you can still dismiss disruptive and under performing employees (regardless of length of service), but my advice (with or without the proposed changes) is to ensure you have a proper and robust process in place that is always followed.
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