All Change? New Developments in Employment Legislation

Within this article I examine two sets of those key changes and what effect they are likely to have on employment law issues in the future.

1. Unfair Dismissal Qualifying Period

The qualifying period for bringing a claim for unfair dismissal (unless one of the exceptions contained in s.108(3) of the Employment Rights Act 1996 applies) has been increased from one to two years, but only for employees who commenced their employment on or after 6^th April 2012.  An employee cannot, therefore, bring a claim for unfair dismissal unless they have been in continuous employment for at least two years, if they started their job on or after 6^th April 2012.  For example, if an employee began their employment on 24^th February 2012, he or she will have the right to claim unfair dismissal if the effective date of termination of his or her employment is on or after 23^rd February 2013.  However, an employee starting his or her job on 24^th April 2012 will not acquire the right to bring such a claim unless his or her effective date of termination is on or after 23^rd April 2014.  The same qualifying period is required for the right of an employee to receive a written statement of reasons for his or her dismissal, on request, such that that period also increased to two years from 6^th April 2012, again for those employees commencing their employment on or after that date. 

The Government has introduced this change (by way of the nattily-titled Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order 2012) in the hope that it will provide more time for employers and employees to resolve difficulties, give employers greater confidence in taking on new workers and ease the burden on the employment tribunal process.  Businesses and business groups are bound to welcome this amendment, providing them with much more flexibility in both hiring and firing employees: not only will it be easier to dismiss greater numbers of employees than at present, but it is also hoped that employers will be less reluctant to engage someone in the first place as a result of the increased freedom provided by the new qualifying period.  Employees, on the other hand, will of course be concerned at what amounts to a relaxation of their rights, albeit that it will only affect newly-employed people.  The majority of those who responded to the consultation on this issue disagreed with the proposal – they included those from the legal community, unions and other advice providers, all of whom argued that the measure reduces employees’ rights, and that it would affect some groups of employees disproportionately.  The Government disagreed with the majority, preferring the views of business stakeholders who were said to be “best placed to evaluate the likely impact on business confidence” (para.113 of the Government Response, available at

http://www.bis.gov.uk/assets/biscore/employment-matters/docs/r/11-1365-resolving-workplace-disputes-government-response.pdf).

The extension of the qualifying period is estimated to result in a reduction of between 2,100 and 3,200 claims brought before the employment tribunal per year, which represents around 4% - 7% of all unfair dismissal claims (information taken from the consultation response, above).  Whilst these figures are relatively modest, they inevitably show that there will be some claimants who will miss out on an award in the tribunal simply due to their no longer having worked for the requisite (extended) qualifying period.  It remains to be seen whether the change in this very important provision will also have the effect hoped for by the Government of improving business confidence.  In due course statistics will need to be looked at carefully in order to assess the impact of extending the qualifying period and whether the measure will have had any effect on the principle of justice being delivered to claimants before the employment tribunal.

2. Procedural Changes

A number of reforms to procedure within the employment tribunal also came into force on 6^th April 2012.  In summary the changes, introduced by the Employment Tribunal (Constitution and Rules of Procedure) (Amendment) Regulations 2012 (SI 2012/468), are:

a.         The maximum amount of a deposit order, made against a party deemed to have little prospect of success in the claim and therefore payable as a condition of proceeding, has increased from £500 to £1,000, to more accurately reflect the cost to employers of defending tribunal claims;

b.         The maximum amount of a costs order that a tribunal may award in favour of a legally represented party has increased from £10,000 to £20,000;

c.         Employment Judges can direct that a party makes a payment to a witness in respect of the costs of attending a tribunal hearing, and the losing party can be ordered to reimburse the winning party for any such costs that have already been paid out; and

d.         Witness statements in a tribunal are to be taken as read, unless the tribunal directs otherwise.

All of these changes, some to a greater extent than others, have the effect of reducing the cost of tribunal proceedings to the taxpayer.  The increase in the deposit order limit should reduce the number of weak cases pursued to a final hearing.  Other cost-cutting measures include provision that Employment Judges will hear unfair dismissal claims sitting alone, again speeding up the procedure in the tribunal (a measure of some significance to practitioners, contained in the Employment Tribunals Act 1996 (Tribunal Composition) Order 2012).

These changes are likely to be seen as a precursor to the implementation of plans to charge fees in the employment tribunal.  The proposals, which include charging a claimant between £150 and £250 to commence a claim, with a further fee of £250 to £1,250 payable if the matter proceeds to a hearing, were the subject of a consultation which ended on 6^th March 2012.  If (or when) these provisions are implemented, bringing a claim before the tribunal could cost a claimant litigant in person a significant amount of money, including now the potential of paying £1,000 in respect of a deposit order, before the matter comes to a hearing.  Some qualifications are outlined in the proposals, such as an assurance that people on low incomes could be subject to fee waivers and plans to give a tribunal the power to order that the unsuccessful party be made to pay the fees of a successful party.  Despite these suggested appeasements, whilst when brought into force these provisions will surely reduce the cost of tribunal proceedings to the taxpayer, they will also reduce the number of claims brought in the first place.  Moreover, depending upon the detail of the fees scheme, the claims that are weeded out by it may not be the ones with the least merit, but rather those brought by claimants who are financially unable to pursue them, at a time when they are vulnerable having, in the main, recently lost their job.  Again, only time and statistics will tell us what the impact of these various measures will be, but it must be that the employment tribunal process is likely to look, and feel, very different within the next year or two, and practitioners, employers and employees alike need to be alive to the changing face of employment claims.

Phillip Morris