The UK government recently announced a big move in the direction of eliminating unfair dismissal. Currently, employees are required to work for two years before being able to bring a claim against their employers. This change would be retroactive to all workers hired after April 6, 2012. While its goal is certainly to help businesses by alleviating burdens and curbing vexatious claims, the policy has generated a range of responses from various interested parties.
Under the new regulations, employees hired before 6 April 2012 are still able to make an unfair dismissal claim. They just have to wait one additional year to accomplish that. The government claims that removing this two-year rule will save businesses £10 million a year. Beyond the environmental value, they calculate that the wider economic benefits may be worth more than £40 million per year.
Even successfully defending an unfounded unfair dismissal claim can be expensive for businesses. On average this amounts to approximately £4,000. For the taxpayer, every one of these claims is a £1,900 bill. In fiscal year 2010-11, tribunal claims were just under 218,000. Of those, unfair dismissal cases accounted for almost a quarter of these claims.
The government frames this reform as part of a larger strategy to streamline the employment tribunal system and reduce the incidence of unsubstantiated claims. Other amendments including doubling the maximum costs that businesses can receive back in vexatious cases, now set at £20,000. Judges are now allowed to preside over wrongful termination cases with no jury present. Witness testimony may be submitted in writing.
Economic development leaders have praised the new regulation as a critical adjustment to stimulate private investment. John Longworth, director general of the British Chambers of Commerce, noted:
“Dismissal rules are a major barrier to growth for many businesses. The majority of small businesses have ambitions to grow, and this will boost their confidence to hire.”
Trade unions and worker advocacy groups express concern that these reforms could undermine job security and lead to a culture of precarious employment. Brendan Barber, the TUC’s general secretary, had a stark message. He is concerned that the government’s proposals would introduce a “hire and fire culture in the UK,” resulting in new workers being trapped in insecure forms of employment.
Business secretary Vince Cable has vigorously defended the changes – pointing out that the old system was hugely inefficient. He stated:
“For too long now the system in place for employment tribunals has been a bloated and bureaucratic obstacle for employers and the taxpayer. For employers they were finding that weak and vexatious cases were too much of the norm, too easy to bring forward, while for the taxpayer they were proving ever more expensive to run.”
Advocates for the reform think the longer deadline for bringing a claim will have a huge impact on younger workers. They make the case that it will benefit a population of workers re-entering the labor force. Neil Bentley, deputy director general of the CBI, remarked:
“It will be a particular boon for young people and those who’ve been out of work, as it will give them longer to demonstrate their value to employers.”