Important New Rules On Unfair Dismissal Qualifying Service Come Into Force

On Friday 6 April the Government increased the statutory qualifying service period for unfair dismissal claims from one year to two years; a move that is part of its ongoing review of unfair dismissal laws, which it believes are too complex and place a disproportionate burden on businesses. The change is not retrospective so it means that any employee whose period of continuous employment starts on or after 6 April 2012 will now need to be employed for two years before they have the right to claim unfair dismissal but those who were already employed before 6 April will still only have to satisfy the one year test.

Anxious to reduce the burden of employment laws and to promote growth the Government hopes that this measure will give businesses the confidence to expand by taking on new staff in the knowledge that if things don't work out then they can dismiss poorly performing employees within the first two years without fear of unfair dismissal claims.  While that is a laudable objective, it remains to be seen whether it will have the desired effect.

One major reason for caution is that the change will not apply to those cases where no minimum qualifying period of service is required; namely where the alleged reason for dismissal is one deemed to be automatically unfair if proven; such as ''Whistleblowing'', or where the alleged reason is one of the protected characteristics under the Equality Act 2010; such as race, sex, age or disability.  The door therefore remains open for determined employees without the necessary two years service to bring their claims under those headings and thereby get round the rule change.

There is also a possibility that there will be a legal challenge to the lawfulness of having a two year qualifying period in the first place on the basis that it discriminates indirectly against certain groups of employees.  A similar challenge based on sex discrimination was in fact made in the 1990's - which was the last time the qualifying period was two years - but that was unsuccessful because the House of Lords accepted that the disproportionate impact on female employees was objectively justified. 

However since the 1990's discrimination law has developed in scope and far more groups with particular characteristics are protected from discriminatory rules.  In this context the advent of age discrimination may be significant as it may be argued that a two year qualifying period has a disproportionate impact on younger employees.

There is no way of knowing whether a fresh challenge will be made or if it would meet the same fate.  Yet we do know that a challenge would herald a period of uncertainty for employers and employees alike and seriously dent the Government's ambition in this important area of employment law.