The UK government is actively considering increasing the
qualification requirement for protection from dismissal from one to two
years as a means of increasing employment.
Unfair dismissal rights
Employees who have a years’ service when they are terminated have
the right to claim unfair dismissal, with current maximum compensation
of £65,300. To avoid expensive claims employers must be careful to
ensure that there is both a fair reason for dismissal and that they have
followed a fair process, which can be very time-consuming.
The government is considering whether to increase the period of
qualifying service for unfair dismissal in order to encourage employers
to take a chance on hiring new staff. For a time during the 1980s the
qualifying period was increased to 2 years and some argue that this
helped to increase the overall numbers of people in employment.
However, since the 1980s the UK has enacted a very large amount of
employment protection that applies from day one of employment,
particularly in relation to discrimination. Awareness has increased in
the workforce that many anti-discrimination rights require no qualifying
service and that there is no cap on the compensation available for a
successful claim.
As discrimination claims are complex, and expensive to deal with and
expose employers to significant reputational damage and uncapped
compensation, increasing the period of qualifying service for plain
unfair dismissal claims may motivate affected employees to pursue
discrimination claims to seek some financial redress. The government is
expected to issue a consultation document before reaching a final
decision.
Commentary
Under the current regime employers can terminate an employee during
the first year of employment by giving the notice required under the
contract or statutory minimum notice (whichever is longer). However,
the first anniversary of employment may pass before the need to
terminate is recognised. Active management during probation periods is
useful to focus attention on whether or not an employee is working out.
Even if employers do not operate formal probation periods it is a good
idea for managers and HR to diarise a review of employee performance
well before the first anniversary of the start date.
For further information or to discuss the issues raised, please get in touch.
