Sue Dowling and Dayna Rodrigues, in our Employment Law team, explain the proposed changes in relation to Unfair Dismissal in the new Employment Rights Bill (ERB).
Employers and Employees are well-used to the general ‘2-year employment Rule’, i.e. that (subject to exceptions*) two year’s continuous employment is needed before an Employment Tribunal is able to consider any claim for compensation for Unfair Dismissal, from a ‘dismissed’ Employee. This has meant that, regardless of the contractual probationary period in an employment contract (typically only 6 or 9 months), an employer can generally wait for almost 24 months** and still dismiss, without fear of facing an actionable claim of Unfair Dismissal. Effectively therefore employers have had the luxury of almost 2 years before they need to make a decision as to whether or not an Employee is ‘suitable’ for the job. The luxury of this 2-year Rule will however be a thing of the past if the provisions set out in Schedule 2 to the ERB come into force, as explained below.
The proposed changes
The Government proposes, in Schedule 2 to the Bill, to remove the two-year qualifying service requirement, meaning that Employees will potentially have the right, from their first day of employment, to bring a claim for compensation for (constructive or actual) Unfair Dismissal against an employer, if their employment comes to an end. This, in turn, raises the prospect of employers having to undergo a much more thorough process before dismissing an Employee and only being able to do so for a ‘fair’ reason (under section 98 Employment Rights Act 1996 (ERA). However, the Government does also intend to introduce a statutory “Initial Period of Employment” (akin to a probationary period), during which time the general provisions under section 98 ERA will be relaxed, allowing an Employer to apply a ‘lighter touch’ process, with greater flexibility to terminate employment with less risk of facing a claim for compensation.
Probationary Periods and the new statutory concept of the ‘Initial Period of Employment’
Most Employers/Employees are familiar with the concept of a contractual probationary period, during which time, the employment can be brought to an end on minimum contractual notice, if the Employee is not considered suitable for the role (or the Employee decides that they do not wis to stay in the role). The contractual notice period (generally) is extended once the Employee has successfully completed their contractual probationary period.
The Government plans to introduce a new construct, namely the “Initial Period of Employment” (IPE), akin to a statutory probationary period. During the statutory IPE, Employers will be allowed to follow a ‘lighter touch’ dismissal process, thereby limiting the ability of an Employee to successfully sue for compensation for Unfair Dismissal, if that process is followed. Further detail as to what this could entail (including what period the IPE will comprise) is yet to be outlined, and we will publish information when it is available.
Please note that the Bill is still under consideration (having just completed the House of Commons’ stages) and is consequently not yet law and could still be subject to change.
Get in touch
Employment Law claims can be complex and difficult to bring successfully. Our Employment Law team can not only represent you in the employment tribunals but can also advise you on your legal position including what potential Employment Law claims you may have, prepare your claim for you and advocate for you at preliminary hearings.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
*A number of exceptions apply where 2 years’ service is not required including “automatic” unfair dismissal and/or unlawful discrimination cases.
** In certain circumstances, an additional period can be added onto the dismissal date taking the Employee up to/over the 2 year mark.
