The following article is written by Andy Talbot, director of marketing, ATE & Broker on behalf of ARAG.
The Employment Rights Bill that was put forward this month is a landmark piece of legislation that sits at the heart of the new government’s agenda. In many ways, it will bring the UK up from a mid-table underperformer in the Champions’ League of employment rights to a genuine contender.
But there’s a serious issue that will undermine the very foundations of the proposed legislation and what it is intended to achieve.
There is nothing fundamentally wrong with extending the right to claim unfair dismissal to all employees from their first day of employment, provided the right guardrails are in place. There’s no real moral or legal rationale behind the right being one that is earned after two years of service.
Any employee can be fairly dismissed for a host reasons, such as conduct, capability or redundancy, as long as the correct process is followed. All employers should know and follow those procedures for workers of longer tenure, so it shouldn’t be too difficult to apply them for new employees too.
However, the fairness of such a significant change in employment law doesn’t mean that our dilapidated justice system can cope with an inevitable and sizable increase in claims.
We can learn a lot from legal history, and the principle of unfair dismissal has more than 50 years of it in the UK. It was first introduced in the Industrial Relations Act 1971 and updated in the Employment Rights Act 1996, when constructive dismissal was recognised and included.
Originally, the qualifying period of service for unfair dismissal was 12 months, but it’s more than a decade since that was extended from one year to two, in 2012. At the time, the government argued that it would reduce the number of claims by 2,000 a year.
Difficult as it is to separate the legislation’s impact from other political and economic factors, it seems to have worked, with more than 4,500 (almost 8%) fewer claims being made the following year.
So, what might the result of reversing that be?
Analysis of the ONS Annual Population Survey by the Chartered Institute of Personnel and Development (CIPD) shows that almost a third (31%) of employees in 2023 had worked for their employer for less than two years.
It would be hugely simplistic to suggest that extending the right to claim unfair dismissal to all employees could result in 50% more tribunal claims, especially as the qualifying service limit does not currently apply in cases involving discrimination or whistleblowing, for example.
The rules around dismissal during a probation period will also be important and have yet to be nailed down, but there will inevitably be a big increase in claims and our tribunal system can’t cope with the volume it’s getting already.
The latest data published by His Majesty’s Courts and Tribunal Service (HMCTS), for the quarter between April and June this year, show that the open caseload of single claims was 18% higher than in the same period in 2023. The total number of open cases has since reached 45,000, more than 20% higher than a year ago.
While the number of claims being received has increased steadily since the pandemic, up at least 15% over the past couple of years, the number being dealt with is down. The number of cases disposed of in the 2023/24 reporting year was 6% lower than the previous year.
The result of this deficit is that the wait to resolve an employment dispute is getting longer and longer. Some more complex cases in certain parts of the country are seeing hearings listed more than two-years off.
Tribunal failings may not seem that high on the list of national priorities, especially when criminal trials are seeing the innocent waiting years for exoneration and the guilty escape justice, but employment tribunal backlogs have their consequences too.
They may not be so dramatic, but these delays have a profound impact on both the businesses involved and their employees. Such claims are particularly difficult for SMEs, creating huge uncertainty, making bosses hesitant to invest elsewhere in the business and potentially discouraging further recruitment.
All businesses need a functioning tribunal system to settle disputes swiftly, and employees shouldn’t have to wait years for their claim to be resolved. If the point of the Employment Rights Bill is to improve fairness and access to justice for employees, the Ministry of Justice will need to fix the employment tribunal system first.
