Business Groups Welcome Unfair Dismissal Qualifying Period Extension

Reforms preventing new employees from making claims for unfair dismissal within two years will give small employers more confidence to take on staff, business groups have said.

The Forum of Private Business (FPB) and the British Chambers of Commerce (BCC) have both welcomed the reforms, along with changes to the tribunal system designed to weed out “vexatious” claims.

From 6 April 2012, employees applying for a tribunal claim will also face an upfront charge of £250 and a further £1,000 fee if the claim is granted ― both refundable if successful. The Government has claimed the changes will reduce the number of unfair dismissal claims by 2,000 each year and save £9 million annually. There were 236,000 unfair dismissal claims brought to tribunal in 2010, with an average award to successful claimants of around £9,000.

FPB spokesman Phil McCabe agreed:

“There’s no doubt that vexatious claims are common enough to have created a fear factor for small firms considering their employment options. This kind of protection is overdue.”

BCC director general John Longworth added that one in five businesses had been threatened with an unfair dismissal claim in the last three years.

“When faced with a tribunal, a large proportion of small businesses opt for settlement since the cost is lower than defending a claim,” he said. “This drives a culture of settlement and acts as a brake on growth and jobs.”

Since 1999, employees have been able to claim for unfair dismissal after just a year with the same employer. The change in the law follows a consultation launched in January and comes on the back of the Red Tape Challenge, a wider scrutiny of UK law.

Employee groups have opposed the reforms. Brendan Barber, general secretary of the Trades Union Congress, described the change to a two-year qualifying period as “a charter for bad bosses”.

“This will do nothing to boost growth and will not create a single extra job,” he added.

Responding to the criticism a Department for Business, Innovation and Skills said:

“Dismissing someone from a business is always going to be a difficult decision and not a decision that businesses take lightly. Employers are able to end the employment relationship or contract, and there is guidance and support available for them to ensure they do so within the law. We believe a two-year qualifying period strikes the right balance between protecting workers and giving businesses confidence to recruit.”

Business Groups Welcome Unfair Dismissal Qualifying Period Extension

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