The Two Year Itch? Increased Qualifying Period for Unfair Dismissal
Like all relationships, the relationship between an employer and employee won’t always work out. But how much time do you need to know if there’s been a failed match?
At the moment, as long as the employee in question has less than one year’s service, employers are able to terminate the employment relationship without risking an unfair dismissal claim. We often see this referred to as a “statutory probationary period”, which is used by many employers as an opportunity to gauge whether a new employee’s performance is up to scratch and, crucially, whether the employee is a “good fit” within the organisation.
As part of its agenda to “cut red tape” for employers, the Government has proposed a raft of pretty radical changes to Employment Law and the Employment Tribunal System. One key change, which comes into force on 6 April 2012, is the increased qualifying period for unfair dismissal claims, from one to two years. This change means that any individuals who start employment on or after 6 April of this year will have no protection against unfair dismissal until they have two years’ service with their employer.
Here are a few notable practical points in relation to this change:
- The increased qualifying period doesn’t apply retrospectively, so anyone who begins employment before 6 April 2012 will only need one year’s service to claim unfair dismissal;
- In the same way as “one year’s service” really means 51 weeks’ service, the two year qualifying period really means that employees falling into this category attain protection after 103 weeks’ service, as they’ll be credited with their statutory minimum notice entitlement of one week; and
- As is currently the case, if an employee believes their dismissal was discriminatory in some way (for example, motivated by race or sex) or falls within one of the relevant “automatically unfair” categories (such as dismissal as a result of whistleblowing), then they will still be able to bring a claim against their former employer from day one.
The Government’s policy aim behind this change, and the other proposals that have been announced, is clear: they intend to boost economic growth and market confidence. In an earlier blog post, I raised some questions about the chances of these aims being met by the proposed changes. It’s fair to say that those concerns remain.
So the burning question must be: does an employer really need two years to know if an employee is cutting it? Isn’t a year long enough to know whether the relationship has fundamental issues that can’t be worked through?
Will employers view the increased qualifying period as an extension to the “statutory probationary period”, and dismiss at will right until the end of the two year period? Many argue that prudent employers will be managing poor performance from the off, and using their own contractual probationary periods to end the relationship, rather than relying on the qualifying service period (whether that be one or two years). But perhaps the greater risk is that a two year window will lead to managers putting their heads in the sand and avoiding proper performance management for the first two years in the knowledge that the risks of dismissal are reduced. And surely every HR professional’s pet hate is the manager who fails to deal with poor performance, only for the employee to trip over into the period of qualifying service?
Another question is what effect (if any) this change will have on employee relations. Could a perceived lack of job security have an impact on employee performance and engagement? And, in line with the law of unintended consequences, will we see increased claims for discrimination in circumstances where employees feel hard done by at the end of the relationship?
For me, the best way to minimise risks of employment tribunal claims will always be to deal with relationship issues as soon as they arise, rather than waiting until things break down beyond repair.