The Labour Party has indicated it will make changes to employment law if it wins the general election.
One of their most significant policies is to give employees’ unfair dismissal rights from day one of their employment. Currently, save for a number of exceptions, employees only obtain unfair dismissal rights when they reach two years’ qualifying service with their employer.
A lot of the commentary about this proposed change is that it will benefit employees and is bad news for employers. The purpose of this article is to consider whether, in fact, the change might be positive for employers and, in some ways, negative for employees.
Over the years a common factual scenario I have advised on is where is a newly recruited employee is hired subject to a contractual probationary period which is usually three or six months in duration. The employee “passes” probation – either with no issues or only minor issues being flagged – and the employer then does no further formal performance management until the employee is dismissed within the two year period on performance grounds. The employee then seeks to pursue a claim for unfair dismissal based on one of the exceptions to the two year rule or presents a discrimination claim alleging the dismissal was a discriminatory act.
The current law, in effect, encourages employees and their advisers to shoehorn the employee’s claim into one of the exceptions to the two year qualifying period (such as health and safety dismissals or dismissals caused by whistleblowing) or into a discrimination claim. These claims are often fairly weak because they are, in all but name, ordinary unfair dismissal cases. They often fail because tribunals conclude that the employee’s performance was the reason for dismissal and not the unlawful reason being alleged. However, where employers can come unstuck is when they fail to provide the employee with a clear explanation as to what their poor performance was, which can be supported by evidence.
If employers know that all dismissals are subject to challenge by employees on the grounds of fairness, it might lead to employers placing a greater emphasis on performance management as opposed to something to be addressed only via probationary periods. A change in culture in this way is likely to be needed to avoid unfair dismissal claims and may also have other positive effects for employers such as increased performance levels (including the performance of line managers), productivity and employee engagement.
On the flip side, I wonder whether the proposed change will have a potentially negative impact on employees. Although the details of Labour’s proposals have yet to be made clear, the proposed changes make reference to an employers’ continuing ability to dismiss employees by utilising contractual a probationary period. I can envisage an unintended consequence of the proposed change may be that employers take a cautious approach to their decision making at the end of a probationary period. Currently an employer may “pass” an employee on the basis that they are on track and likely to improve in time to reach the required standard, safe in the knowledge that there is a safety net whereby they can fairly safely dismiss within the first two years if the required performance level is not met. The lack of qualifying period may encourage a more ruthless approach by employers at the end of probationary periods with those employees who may previously have been given the benefit of the doubt will being let go.
It will be interesting to see how the proposed change is implemented, assuming a Labour general election victory next month, and the extent to which it changes workplace culture for employers and employees alike.
For more information or advice on this or any other Employment Law & HR issue, please get in touch with James Symons on 0115 9 100 250, or send him an email.
Posted on June 12, 2024
