Coverage of unfair dismissal law extended

From 1 June 1999, the qualifying period of employment necessary for claims of unfair dismissal in the UK will be reduced from two years to one year, extending statutory protection to an additional 2.8 million employees.

A draft order reducing the qualifying period of continuous employment for the right not to be unfairly dismissed was approved by Parliament during May 1999 and is due to come into force on 1 June. From that date, employment tribunals will be able to hear complaints of unfair dismissal from dismissed employees with at least one year's service. A two-year qualifying period has applied since 1985. The reduced qualifying period also applies in respect of the statutory right to receive a written statement of the reasons for dismissal. The Department of Trade and Industry says that the change will improve job security for 2.8 million employees while maintaining the flexibility employers need in recruitment.

Reducing the unfair dismissal qualifying period was proposed in the government's 1998 Fairness at work white paper (UK9806129F). The Trades Union Congress has welcomed the change as an important step forward but considers that a one-year qualifying period still leaves scope for potential abuse by employers. The Confederation of British Industry accepts that the qualifying period should be reduced to one year but would be strongly opposed to any further reductions, stressing that it is important to keep a sensible period in which employment can be terminated without employers facing complex and expensive litigation.

There have been reports of some companies moving to dismiss "problem" employees with less than two years' service before the reduction in the qualifying period takes effect on 1 June. In the longer term, commentators believe that the change to the law may result in a significant increase in the number of unfair dismissal claims. During 1998, over 40,000 former employees initiated unfair dismissal claims, though three-quarters of these were settled or withdrawn after conciliation provided by the Advisory, Conciliation and Arbitration Service without the need for an employment tribunal hearing. A further change in the pipeline concerns the maximum level of compensation which can be awarded in cases of unfair dismissal: this will rise from GBP 12,000 to GBP 50,000 once the Employment Relations Bill becomes law and takes effect (UK9902180F).

The issue of whether the two-year qualifying period for unfair dismissal discriminated indirectly against women is to be determined by the House of Lords following the ruling by the European Court of Justice in February 1999 in the Seymour-Smithcase (C-167/97) that unfair dismissal compensation constitutes "pay" within the meaning of Article 119 of the Treaty of Rome.

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