Increasing the unfair dismissal qualification period

Consultant editor Darren Newman argues that the question of how much service an employee should have before gaining unfair dismissal rights is a straightforward political one, being couched by the Government in terms of giving businesses more confidence to recruit.

The first of what may turn out to be many proposals for the reform of employment law was published by the Department for Business, Innovation and Skills on 27 January 2011. Many of the proposals are focused on the workings of the employment tribunal system, but one of the most important is a straightforward matter of employee rights: the qualifying period for unfair dismissal. The proposed extension from one year to two should come as a surprise to no one. The last Conservative Government increased the qualifying period twice - from six months to one year in 1980, and from one year to two in 1985. It is worth noting that the Secretary of State for Employment who introduced the two-year qualifying period was David Young - now Baron Young of Graffham, erstwhile enterprise adviser to the Prime Minister. Lord Young, prior to his resignation in November 2010, had already hinted that an extension of the qualifying period was on the cards, so the current consultation document merely confirms what most people expected.

What is noticeable about this proposal is not that it is being made, but the rhetoric that surrounds it. In truth, the question of how long an employee should remain employed before gaining unfair dismissal rights is a straightforward political one. Those who tend to favour the rights of employees will want to see a short qualifying period, and those who essentially believe that unfair dismissal law is an intrusion into the freedom of managers to manage will want as long a period as possible. However, this is not the sort of argument that the Government can put forward in the current climate - and is hardly in tune with the spirit of the coalition. (To be fair, the last Labour Government also shied away from putting these issues in stark, rights-based terms.)

Instead, the Government has placed the proposal in the context of measures to encourage employers to take on new staff. It is intended that this will encourage growth by giving businesses more confidence when they recruit. In the consultation document, the Government asks employers what effect the qualifying period has on their confidence in recruiting and whether or not they would be more likely to recruit if the qualifying period was raised to two years. It is, of course, in the direct interests of employers and their lobbying groups to answer this question with a firm "yes", but such an answer would be unconvincing. Surely one year is long enough to allow an employer to assess whether the decision to recruit an employee was the right one or not. Few jobs operate on a cycle of more than one year, and most probationary periods do not extend beyond six months.

The consultation suggests that the one-year period may be too short to allow employers and employees to resolve their disputes, creating an incentive for employers to dismiss employees earlier than they may otherwise have done. The Government asks if the current one-year qualifying period results in people being dismissed immediately before the deadline, without a fair procedure being followed. The implication is that this problem will be solved by the extension of the qualifying period to two years, and that in this sense the change will actually benefit employees.

The sheer cheek of this argument is almost admirable. It is certainly true that employees are often dismissed just before they would qualify for unfair dismissal rights, but increasing the qualifying period will not remove this problem, or even give the employees concerned an extra year of employment. Employees are dismissed because their employer either does not want to employ them or can no longer afford to. Just because they can wait another year before unfairly dismissing an employee does not mean that they will.

The Government stresses that it does not see this proposal as a charter for businesses to sack people unfairly, but that is precisely what it is. Politically, you may regard it as a good thing or a bad thing, but there is no escaping the fact that what the change will do is to give employers the right to sack people unfairly where they would previously have been entitled to claim unfair dismissal. The proposal is to remove, on the Government’s own estimate, some 2.9 million employees from the scope of unfair dismissal law.

Of course, this does not mean that employers will be able to sack such employees with impunity. In cases of discrimination, or where the reason for dismissal is one of the automatically unfair reasons set out in the Employment Rights Act 1996, the employee will still be able to bring a claim in relation to the dismissal from day one. One side effect of the change will undoubtedly be to increase the number of such claims, as employees dismissed before attaining two years’ service seek to squeeze the facts of their case into one of the rights that does not require a qualifying period.

In the run-up to this proposal we saw many media commentators bewailing the fact that, in recent years, the balance of power in the employment relationship has shifted too much to the side of the employee. I have never believed this. To my mind, employment law is biased in favour of a well-informed and well-advised employer (although ill-informed and badly advised employers are always going to struggle).

Despite the modern rhetoric, this proposal belongs very much to the ideology of the last Conservative Government. That does not make it wrong, of course. The idea is to encourage people to hire by making it easy to fire. On this view, removing from a significant number of people the only protection that they have against arbitrary or unfair treatment in the workplace is a price worth paying. That is a perfectly coherent political view, but we should be clear that it is political.

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