Changes to unfair dismissal rules have today been confirmed by Business Secretary Vince Cable and Chancellor George Osborne. The 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. Ministers say the move could save British businesses £6 million a year.

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.

The Government claims these combined proposals should see the number of unfair dismissal claims drop by around 2,000 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.”

John Cridland, CBI Director-General, commented: “Extending the qualifying period for unfair dismissal is a very positive step. We have been urging the Government to do everything it can to make it easier for firms to grow and create jobs, and this will give employers, especially smaller ones, more confidence to hire.”

However, Dr John Philpott, Chief Economic Adviser at the Chartered Institute of Personnel and Development (CIPD), said: “While watering down unfair dismissal rights is seen as a way to boost recruitment and improve job prospects for young people and the long-term unemployed, the short-run impact will be limited by the overall weak state of the labour market while in the long-term any positive effect on hiring is likely to be offset by a corresponding increase in the rate of dismissals.”

Back to Employment Law Articles