Unfair dismissal rule changes could save british Business £6million

2nd October 2011

Changes to unfair dismissal rules which could save nearly £6 million a year for British business have been announced today by Business Secretary Vince Cable and Chancellor George Osborne.

Today's decision will see the qualification period for the right to claim unfair dismissal extended from one to two years. This will come into force on 1 April 2012. This is the latest development in the Government's workplace reforms which aim to increase business confidence to take on more workers.

Changes to the unfair dismissal rules follow the 'Resolving Workplace Disputes' consultation published in January this year which also proposed measures to encourage early resolution of disputes, the speeding up of the tribunal process and measures to tackle weak and vexatious claims.

These combined proposals should see the number of unfair dismissal claims drop by around 2000 a year.

Business Secretary Vince Cable said:"The priority of this government is to increase growth in our economy. We have one of the most flexible labour markets in the world but there is more we can do to give British business the confidence it needs to create more jobs and support the wider economy to grow.

"Businesses tell us that unfair dismissal rules are a major barrier to taking on more people. So today we have announced that only after working for the same employer for two years can an employee bring an unfair dismissal claim."

A key part of the Government's growth strategy is to create the conditions which allow businesses, particularly SMEs, to grow and expand by reducing regulation and maintaining a flexible and dynamic labour market.

Over the past 18 months, the Government has started a fundamental Employment Law Review to ensure that it is fit for purpose, that it properly balances the needs of employers and employees, and provides the competitive environment required for businesses to thrive.

For the next three weeks the Red Tape Challenge will focus on more than 160 different cross-Government employment related regulations that businesses have to deal with in all areas of the workplace.

The campaign asks for a variety of suggestions about how regulations can be improved, simplified or even abolished, whilst also ensuring that the current standard of employment rights for employees are maintained. Examples of regulations which Government is seeking views on include the rules on collective redundancies, employment agencies, immigration checks, the National Minimum Wage and statutory sick pay, to make sure they are fit for purpose and easier for businesses to understand.

More Information

1. The Employment Law Review is a Parliament long review looking at all aspects of employment law and is part of the Government's plans to deliver growth by breaking down barriers, boosting opportunities and creating the right conditions for businesses to start up and thrive. Since the review was announced last summer the Government has:

* consulted on a package of reforms to the employment tribunal system, aimed at encouraging earlier resolution of disputes in the workplace and reducing the number of tribunal cases (which are costly for employers, employees and Government)
* launched an Employer's Charter that reassures employers about what they can already do to deal with staff issues in the workplace
* launched a review of the compliance and enforcement regimes for employment law, with the aim of streamlining the system
* removed the Default Retirement Age, thus removing significant paperwork obligations for employers and bringing wider benefits to the economy, making it easier for older people to continue working
* announced the proposed abolition of the Agricultural Wages Board and Agricultural Minimum Wage, pending consultation and the Parliamentary process
* commissioned an independent review jointly with DWP (from David Frost and Dame Carol Black) of the system for managing sickness absence
* repealed the planned extension of the right to request flexible working to parents of 17 year olds
* decided not to bring forward the dual discrimination provision in the Equality Act
* not extended the right to request time to train to companies with fewer than 250 staff.

2. On 27 January the Government published a consultation 'Resolving Work Place Disputes' it sought views on measures to encourage early resolution of disputes, the speeding up of the tribunal process and measures to tackle weak and vexatious claims. To view the press notice go to http://nds.coi.gov.uk/content/detail.aspx?NewsAreaId=2&ReleaseID=417630&SubjectId=15&DepartmentMode=true

3. The Red Tape Challenge was launched by the Prime Minister on 7 April. It gives the public the chance to have their say on some of the 21,000 regulations that affect their everyday lives. The website is available at www.redtapechallenge.cabinetoffice.gov.uk

4. The campaign has six cross cutting themes that affect all businesses and are open throughout the whole of the campaign. The six cross cutting themes are:

a. Employment law;
b. Pensions;
c. Company law;
d. Equalities;
e. Health and Safety; and
f. Environment legislation.

Source - Department for Business, Innovation and Skills
www.bis.gov.uk