Current position
As it stands, an employee needs to have two years’ service to claim unfair dismissal except in exceptional circumstances. What this means is that if an employer’s decision to dismiss does not fall within a reasonable band of responses of a reasonable employer, the dismissal will be unfair and the employee will be entitled to compensation falling into two main elements. The first is a basic award which mirrors statutory redundancy. The second is loss of earnings of up to a year’s pay, but subject to a statutory cap which, at the time of writing is £115,115. In absence of two years’ service or any other claims, the employee is only entitled to the sums due under their contract of employment, such as accrued holiday pay and a payment in lieu of notice. The labour government plans to make unfair dismissal a day one right.
The impact of day one rights
So, what will this mean in practical terms? The Employment Tribunal has a history of being overburdened with claims due to insufficient resources. In 2013, for the first time in history, the British Government required a Claimant to pay Tribunal fees to bring a claims. These fees were abolished in 2017 after a successful court case against the Government which argued that an introduction to fees prevented access to justice. Whilst the introduction of Employment Tribunal fees initially brought the level of claims down, after the fees were abolished, claims again surged. This has partly led to the need to recruit more Employment Judges. This is the first time in history that employees will have right not to unfairly dismissed from day one, and this will undoubtedly lead to a significant number of additional Employment Tribunal claims. The inevitable consequences of this are that the Employment Tribunals will again become overburdened leading to delays and backlogs. The changes are also likely to result in employers exercising a lot more caution in their recruitment procedures and, with the uprising of AI, potentially a reduction in recruitment and/or redundancies which may then push up unemployment.
Are day one rights really necessary?
We don’t really know the finer detail of the forthcoming changes in making unfair dismissal a day one right and there are likely to be exceptions including circumstances where an employee is on a probationary period. Whilst the rights will certainly protect an employee from an unscrupulous employer, such an employer is less likely to resolve a dispute which will leave the employee with the choice of going through a long and stressful Employment Tribunal process with no immediate resolution, or moving on with their life without any recompense. On the other hand, the new legislation may benefit employees with scrupulous employers as they may be more inclined to resolve matters with the employee at an early stage. Many such employers, in any event, might be inclined to make a departing offer to an employee, even in circumstances where no claims are evident. As an aside, employees do currently have other claims which are day one rights such as the protection from discrimination if such discrimination is based on a protected characteristic such as sex, race, age, disability or religion/belief to name a few.
Balancing things up, it is arguable that making unfair dismissal a day one right is unlikely to have any significant positive impact. In addition to what has been stated above, the compensation that might be awarded to an employee may not be proportionate to the length of time, stress and cost that they might suffer by having their claim heard. Consequently, an employee may be deterred from bringing a claim, particularly if they have only been employed for a few months and are able to gain other employment promptly. Despite this, it is extremely likely that there would still be a substantial number of additional claims which will overburden the Employment Tribunal to a point that has never been seen before.
