On 6 April 2012, the qualification period for the right to claim unfair dismissal for new employees increased from one year to two.
Since then, the Government has indicated that it intends to reduce the amount of compensation employees will receive if they bring a successful unfair dismissal claim (which is already capped at £72,300) and now George Osborne has waded into the argument by suggesting that employees will be able to opt out of unfair dismissal and other rights in exchange for shares in the business.
These changes and others in the pipeline (such as settlement discussions) are predicated on the belief that our employment laws deter businesses from expanding by taking on new staff – a view flatly contradicted by the Government’s own research which showed that the UK is ranked second in the world for ease of dismissal of individual employees.
That’s not to say that businesses have nothing to complain about. Anyone who has been embroiled in an employment dispute, will know that they are time consuming and often expensive to resolve.
Some employees bring unfair dismissal claims, they know to be weak in the hope that their employer will offer them some money to settle, rather than defend the case. Recent figures indicate that nearly 25% of the unfair dismissal claims brought last year were withdrawn – presumably because at least some of these cases had no chance of succeeding. However, the vast majority were settled before the hearing.
Although no details are available to indicate the average or median settlement, we know that those cases which were successful at a hearing, resulted in a median award of £4,560 – which is not even close to the maximum award that can be made which will generally only apply to high earners, or to employees who link their dismissal to claims of discrimination.
Rather than tinkering with unfair dismissal law and providing misleading headlines, the Government would be better advised to concentrate on pushing through changes to the tribunal system so that cases without merit can be dismissed at an early stage – a proposal that is currently subject to a consultation which ended in November.
This move will benefit business and will enable employers to robustly defend cases where the claimant is simply “chancing it”. In time, this is bound to result in fewer claims being brought and will result in employers having more confidence in the system.