It has recently been suggested that there could be a change in the law so that employees will be required in most cases to have two years continuous service in order to bring a claim for unfair dismissal. Currently employees are required to have just one year of continuous service, unless the dismissal is due to one of a few very limited reasons, such as the employee being pregnant or asserting trade union, health and safety or other statutory rights,. In these limited circumstances there is no minimum service requirement.
Any such proposed change is likely to be strongly opposed by trade unions, as the rights and job security of employees would be reduced. However for employers and recruiters any such proposed change can only be welcomed. An increase in the requirement for continuous service will reduce the number of employees eligible to claim that they have been unfairly dismissed. It will therefore be easier for employers to dismiss, manage performance or other issues and also make employees redundant where they have less than two years service. Unfair dismissal claims, including claims relating to redundancy payments, are claims that can only be brought by employees. If an agency worker engaged on a contract for service wishes to make such a claim they must first assert that they are an employee of either the agency or the hirer. A two year service requirement should therefore see a decrease in the number of employment status claims.
Some agencies may be considering whether to change their business model and enter into employment contracts with agency workers, as a means of dealing with the equal pay elements of the impending Agency Worker Regulations. Whilst there are a number of difficulties with this approach and question marks over the protection it really offers; an increase in the service requirement for unfair dismissal claim would benefit an agency that employs its temps. This is because it would decrease the number of agency workers eligible to bring unfair dismissal claims on termination of their assignments.
A reduction in tribunal claims is something that can also only help the Employment Tribunals; they are already under pressure with some 57,000 unfair dismissal claims in 2009/2010 and an ever-increasing backlog. The move would also reduce Employment Tribunal time and costs, although perhaps only to be replaced next year by claims under the Agency Worker Regulations.
Unfair dismissal service requirements were originally 6 months in 1971, and then in 1985 the requirement was increased to two years but reduced to one year in 1989 after a legal challenge. It is at this stage simply a suggestion and there has neither been any acceptance of the principle by government nor any firm proposals. Lord Young who made the suggestion has since resigned from his role as an advisor to David Cameron, so how this matter develops is something we shall have to wait and see.