By Kristie Willis, Employment Law Solicitor, Palmers Solicitors
In accordance with the forecasts, Labour succeeded in obtaining a landslide victory at the general election on 4 July.
In a bid to deliver on major manifesto pledges, this is likely to result in some significant changes to employment law, particularly within the party’s first 100 days – most notably a day-one right to protection from unfair dismissal.
The issue of unfair dismissal
Currently, most employees have to wait two years before they have the right not to be unfairly dismissed (unless they are dismissed for an automatically unfair reason).
Labour is proposing that this right will apply to employees from day one of employment.
This will not prevent dismissals for the reasons of conduct, capability or redundancy, which are the main fair reasons for dismissal currently – there is no reference to dismissal for some other substantial reason, although this is not often relied on.
The party is yet to say whether the processes for these dismissals will remain the same. This unfair dismissal extension will be subject to the employee’s probationary period.
Labour has yet to release any information on how dismissal during probationary periods will operate and whether any dismissals will need to be for reasons of conduct, capability and redundancy.
It is also not clear whether an employee could be dismissed at any point in the probationary period or only at the end of that period, in addition to whether there will be any limits on probationary periods in terms of extensions.
If there is no restriction on probationary periods, it seems likely that employers will seek to impose longer probationary periods to allow flexibility and more opportunity to assess new employees. It therefore appears that the duration of probationary periods will likely need to be limited, for example by a maximum period.
A growing number of claims
The extension of unfair dismissal rights is likely to result in an increase in claims and it may be that employers are more cautious of hiring new employees if there are additional costs or management time required to manage the probationary period.
It is unlikely that dismissal for any reason during the probationary period would be permitted as this would severely restrict the access to unfair dismissal protection from day one and would simply impose a new minimum service requirement (that of the probationary period).
If dismissal would be permitted only for failing the probationary period and this is the only way to dismiss someone outside of the standard fair reasons for dismissal (conduct, capability and redundancy), it seems likely that some form of process would be required, although this could be less onerous than a full capability procedure.
Employers may wish to make their recruitment processes more rigorous to ensure that the correct employee is recruited to the role and may be less willing to take a chance on someone.
Planning ahead
Labour has said it will consult on the proposals for these measures – and it will likely need to complete these quickly in order to comply with its set timeline.
It is expected that a lot more information will be released over the coming weeks and months. Once this information is released, it will be important for employers to update their contracts of employment to ensure that they can rely on their probationary periods and their policies to fairly dismiss employees during or at the end of the probationary period if necessary.
Over the coming years, there will likely be a significant increase in employment tribunal claims as employees’ rights are extended and employers are placed under increasing restrictions on when they can dismiss. Labour has also suggested it will remove the cap on compensation for unfair dismissal and this may well increase the value of successful claims.
Ultimately, the next few years will involve substantial changes to the rights of employees and workers – and not just for reasons of unfair dismissal.
We’re likely to see the abolition of fire and rehire, except in circumstances where there is no ‘genuine alternative’, as well as a boost and further extension to the National Minimum Wage.
Labour has further pledged to remove the different tier status of employees and workers so that everyone (except the genuinely self-employed) falls under the status of worker.
There is a pledge to “consult in detail” on this and therefore it is likely this will not be one of the changes implemented within 100 days of taking office but a significant change to prepare for in the future.