Welcome break or cause for concern?

On 3 October 2011 Chancellor George Osborne announced two important changes to the employment tribunal system in an effort to reduce the number of claims raised, and to boost the economy by saving businesses £6 million per year.

Increasing the qualifying period

The first change will see the qualifying period for protection from unfair dismissal increase from the current one year to two years as from April 2012. Whilst business groups have welcomed this change as a way of not only reducing an employee’s ability to raise a vexatious claim, but also reducing the number of unfair dismissal claims by 2,000 per year, employee groups have criticised the change, expressing concerns that it will ultimately reduce protection for employees.

Sceptics argue that the benefits may be less effective than is envisaged, because employees who do not have the qualifying two years’ service will rely on other claims such as, for example, discrimination claims, for which there is no qualifying period. It is well known that discrimination claims by their very nature are often more complex, time consuming and costly compared to an ordinary claim for unfair dismissal.

It could also be argued that the change is unnecessary because it really shouldn’t take an employer two years to determine whether an employee is suitable and capable of doing the job for which they are employed. If an employer cannot assess an employee’s suitability within one year, it suggests the employer themselves must be doing something wrong.

It is also worth noting that this change could yet be challenged on the grounds of both indirect sex discrimination and age discrimination.

Introduction of fees

The second change is the introduction of fees from April 2013 for submitting a claim, and when a case is listed for a hearing. Consultation on the level of the fees is due to conclude at the end of November, but it is widely reported that a claimant will be expected to pay a fee of £250 for submitting a claim, and another £1,000 when a case is listed. The fee will only be reimbursed where the claimant is successful, and in recent days the Employment Relations Minister, Ed Davey – presumably in response to concerns that the introduction of a fee will disproportionately affect the less well-off – said that the fee will be waived altogether or then reduced if a claimant has not secured alternative employment or is on a low income.

It is envisaged that the introduction of a fee will provide a disincentive to unmerited and vexatious claims and will thus encourage businesses to employ new people. But surely the fear of being taken to an employment tribunal cannot possibly be the only reason why employers are not recruiting? Current market conditions and the reluctance of banks to lend must also be recognised as contributing towards the lack of growth in the business sector.

Some welcome the introduction of a fee, as it brings the system in line with sheriff courts and the Court of Session, but others fear that this change will reduce access to justice and may even prevent those from raising a perfectly valid and meritorious claim.

Only time will tell whether the Government will achieve its objective of increasing employment and reducing the number of tribunal claims, balanced against access to justice.