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Government may increase unfair dismissal period to two years

Following a government leak at the weekend it was today (Tuesday 2^nd November, 2010) confirmed by Lord Young on Radio 4's Today programme that the Coalition Government is planning to increase the qualifying period for unfair dismissal to two years.

Although the timetable for a decision has not yet been announced, no decision will be taken without first a consultation period about this and other employment issues.

No Act of Parliament is required to bring in any change in qualifying periods - simply an Order by the Minister for Employment Relations under s209 ERA 1996.

This would reverse the reduction in the qualifying period enacted by the previous Labour government in the Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order of 1999, SI 1999/1436.

The proposed change to the unfair dismissal limit is part of the Government’s "pro-business" campaign to boost UK competitiveness and restructure the economy making it more competitive with more flexible workforces in the emerging markets of Asia and the Americas.

Inevitably employees’ representatives have reacted critically to the leak.  Len McCluskey, assistant general secretary of the Unite union, responded saying: "This is turning the workplace clock back to the 1980s with a vengeance. Thatcher's heirs are again putting business ahead of ordinary people's interests."

The period of continuity of service needed to become eligible for unfair dismissal rights has been changed periodically over the last four decades. It began as six months in 1971, then increased to one year (two years for small firms of 20 or less employees) in 1980 and to two years (for employees of any employer regardless of size) in 1985. In June 1999 it was reduced back to one year where it has stood since.

Implications for Employers of Increasing the Unfair Dismissal Period

On the face of it the proposed change could be fairly good news for employers - the period that staff must work before they can claim unfair dismissal is currently one year.

Theoretically, if the qualifying period for unfair dismissal - which is essentially a breach of contract claim - were to be increased, employers would have an additional year to dismiss unfairly - but they could still face a claim of discrimination (or unfair dismissal claims where no qualifying period is required, i.e. whistle blowing and certain health & safety, maternity and trade union related dismissals). Since such claims tend to be more expensive to defend than 'ordinary' unfair dismissal claims, it is uncertain whether employers will in general benefit from this change.

To speak to an Employment solicitor about a claim of unfair dismissal, or other any employment law matter, please use the details below.

Pearson Hinchliffe Commercial Law | Hollinwood Business Centre, Albert Street, Hollinwood, Gtr Manchester, OL8 3QL
Telephone: +44 (0)161 785 3500, Fax: +44 (0)161 624 2589, Email: enquiries@pearson-hinchliffe.co.uk