George Osborne announces significant reforms to employment law

In his speech to the Conservative Party Conference yesterday, Chancellor George Osborne announced two significant reforms to current employment law, intended to reduce the number of employment tribunal claims and boost the economy.

Firstly, the amount of time an employee has to have worked for a company before being able to bring an unfair dismissal claim has doubled from 1 year to 2 years. This change will come into affect on 6 April 2012.

Secondly, for the first time workers will have to pay in order to bring a claim at the Employment Tribunal.  From the limited information currently available, it appears likely that the following fee structure will apply:

• upfront fee of £250 when lodging ET1;
  
• further fee of £1,000 payable by Claimant when the hearing is listed;
• higher fees if the claim is for over £30,000.
  

The fees will be refundable if the claim is successful and there are plans for fees to be waived for those without the means to pay (although the precise details have not yet been released). The aim of these reforms is to give a helping hand to businesses by discouraging vexatious applications to the Employment Tribunal. The Government claims that such reforms will save UK businesses £6 million a year and decrease the number of unfair dismissal claims brought by 2,000 annually.

Unfortunately, it's not all good news for employers. We are concerned that the changes to the qualifying period will not actually reduce the number of claims made to the Tribunal.  Those employees who have insufficient service to bring an unfair dismissal claim will simply bring a claim under discrimination legislation where there is no service requirement.  For example, claiming sex or age discrimination on the basis that the length of service requirement indirectly discriminates against them on the basis of their sex or age. Trade Unions and Human Resources professional bodies have also expressed concerns that the reforms will encourage a 'hire and fire' approach that will be detrimental to workers and encourage rash behaviour on the part of employers.

We will keep you updated as further details on the changes are released.