UK Employment Law Update – Changes announced by Chancellor to come into force in 2012/13

Chancellor George Osborne took the opportunity at the Conservative Party’s Annual Conference to announce significant reforms to the Employment Tribunal system which are due to come into force in April 2012 and 2013. The changes will:

• increase the qualifying period for an employees wishing to bring an unfair dismissal claim from 51 weeks to two years; and
• introduce fees to be paid by a claimant (which will be refunded if the claimant wins, but forfeited if they lose):

- a fee of £250 when lodging a claim in the Employment Tribunal;

- a fee of £1,000 when the hearing is listed.

Further details of how these initiatives will work in practice are still to be released although the Government has said that the fees will be reduced to nil if a claimant cannot afford them and potentially increased if the claim is valued at over £30,000.

The changes are designed to give employers more flexibility when it comes to hiring and firing employees, as well as to discourage vexatious claims. The Government has said that it expects to see unfair dismissal claims drop by around 2000 a year. The Chancellor seems to want to take on the “no win, no fee” litigation culture which has apparently caused some businesses to be overly cautious in their recruitment approach. Trade unions have commented that these changes will undermine already vulnerable employees by reducing their access to legal protection against “bad bosses”. It remains to be seen if the provisions will have the intended effect of reducing vexatious litigation, as it can be predicted that discrimination and whistleblowing claims (which don’t have such a service requirement) are likely to increase as a result.