Dismissal: The Law of Unintended Consequences

Will doubling the qualifying period for unfair dismissal bring in further traps for unwary employers?

It is nearly a year since the Government increased the qualifying period for bringing an unfair dismissal claim from one to two years. But has the change helped employers, or is there now a greater risk of making mistakes?

Established rights

Employees who started work on or after 6 April 2012 require two years’ continuous service before they can claim ordinary unfair dismissal.  However, employers need to remember this rule only applies to new employees. Those employees whose employment commenced on or before 5 April 2012 still only need one year’s service to bring a claim (and this will not change until they leave their job). It may sound obvious, but experience shows some employers still assume that all employees now need two years’ service before they can claim unfair dismissal.

Assuming an employee does not have enough service to claim unfair dismissal could lead employers to dismiss without a potentially fair reason and/or without following a fair procedure (including the ACAS Code of Practice on Disciplinary and Grievance procedures), which may well be unfair.   

No service required

Employers should also consider whether the employee could bring a claim for automatic unfair dismissal for which no qualifying period is required. Examples are dismissals relating to raising health and safety concerns, or alleging breaches of the working time regulations (holiday entitlement, rest breaks, hours worked and so on).

Irrespective of length of service, it is good practice to invite employees to a meeting to explain why their dismissal is being contemplated.  This could help identify mitigating factors or other potential claims. Take, for example, an employer deciding to dismiss an employee who is consistently late for work. At the meeting the employee reveals that the reason she is late is because she has to care for her disabled partner before she comes to work.  If this factor is ignored, it could lead to a successful claim for discrimination, for which there is no qualifying service or cap on compensation.

Crucial dates

Dismissing employees at 51 or 103 weeks’ service, just before they acquire the right to bring a claim for unfair dismissal also has potential risks. Extreme care should be taken because if employment is terminated without notice or with less than the minimum statutory notice (one week for up to two years’ continuous employment) then the employee is considered to have been dismissed on the date when statutory notice would have expired. For example, if an employee who started on 4 April 2012 (and who therefore only needs one year’s service to bring a claim for unfair dismissal) is dismissed without notice on 2 April 2013 then (unless the employer has strong grounds for dismissing for gross misconduct) a week’s statutory notice is added on, taking it up to 9 April 2013 and giving the employee the year’s service required to claim unfair dismissal.

Reforms ahead

Some changes to unfair dismissal law are coming in under the Enterprise and Regulatory Reform Bill, which should receive Royal Assent within the next month or so. The legislation will:

  • Remove the qualifying period for unfair dismissal where the reason or principal reason for dismissal relates to an employee’s political opinions or affiliation;
  • Cap unfair dismissal compensation to a year’s pay or the statutory cap, whichever is the lower;
  • Prevent “settlement discussions” from being referred to in ordinary unfair dismissal claims where the correct process has been followed;
  • Introduce changes to whistleblowing law; and
  • Introduce Early Conciliation via ACAS and financial penalties for employers that lose tribunal claims. 

All the reforms are coming in this summer, apart from Early Conciliation, which will take effect in spring 2014.

Understanding the rules about the qualifying period for unfair dismissal, as well as other changes on the horizon, is as important as ever.

Source: Schollar, V. (2013) The Law of Unintended Consequences. People Management.


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