Media Briefing Note: Government's Unfair Dismissal Changes may Result in an Increase in Discrimination Claims

LONDON, 30 March 2012 – One week today a significant change to how unfair dismissal claims are handled will come into force - the qualifying period of service required for an employee to present a claim for unfair dismissal will be extended from one to two years.

The move is part of the Government's Red Employment Law Review which is intended to trim back employment law to make it easier to understand and reduce the burden on businesses.
The coalition has reportedly estimated that the change to unfair dismissal claims will save businesses at least £6million per year, with a reduction of around 2,000 claims each year. However, Hogan Lovells believes that, although the number of unfair dismissal claims will drop slightly as a result of the changes, the overall number of tribunal claims will not - as more employees may decide to bring a claim for discrimination instead of unfair dismissal in order to get around the changes.

Anna Jeevanjee, senior associate at Hogan Lovells, said:

"A disgruntled employee who lacks the requisite service to bring an unfair dismissal claim might well decide to bring a claim for discrimination (on grounds of race, sex, sexual orientation, religion or belief, age or disability) or a whistleblowing claim instead. Since discrimination and whistleblowing claims are more complex and costly to defend and generally attract higher compensation this could well undermine the Government's objective of encouraging businesses to take on staff.

"The proposed change will undoubtedly have some impact on the number of unfair dismissal claims but the impact is unlikely to be dramatic. Last year 47,900 unfair dismissal claims were accepted and the year before that the figure was 57,400, so while there are always fluctuations year on year, the overall number of unfair dismissal claims is high and is unlikely to change dramatically as a result of the extra year's service required. When coupled with the likely rise in non-service related claims, the overall impact on the total number of claims submitted will probably be very small.

The Government has confirmed that the new qualifying period will only apply to employees whose employment begins on or after 6th April 2012. Those employees already in employment before this date will retain the current one year qualifying period.

Meanwhile, 6th April will also see other significant changes to employment tribunal procedures, including:

• Employment judges will hear unfair dismissal cases alone in the Tribunal and there will no longer be lay members (traditionally one from a trade union or other employee-friendly body and one from an employer-friendly body)

• The maximum amount of a costs order which a Tribunal may award in favour of a legally represented party will increase from £10,000 to £20,000;

• Witness statements will no longer be read out by a witness unless the Tribunal directs otherwise; and

• The maximum amount of a deposit order which a Tribunal can order a party to pay as a condition to continuing with Tribunal proceedings will increase from £500 to £1,000.

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