News and Events

Unfair Dismissal Qualifying Period may increase to two years

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It leaked at the weekend, and was confirmed this morning by Lord Young on Radio 4's Today programme. The government is actively considering increasing the qualifying period for unfair dismissal from one year to two years. The timetable for a decision has not yet been announced, and it is likely there will be a consultation period (about this, and other employment law issues) first.

If the change occurs, it is moderately good news for business, but bad news for employees. In theory, employers would have an extra year to dismiss unreasonably - but they could still face allegations of discrimination (or unfair dismissal claims where no qualifying period is required, ie whistleblowing and certain health & safety, maternity and trade union related dismissals). Since such claims tend to be more expensive to defend than 'ordinary' unfair dismissal claims, it is unclear whether employers will find this proposal an entirely favourable change.

No Act of Parliament is required to bring in any change in qualifying periods - simply an Order by Ed Davey, the Minister for Employment Relations under s209 ERA 1996.

The length of service needed to qualify for unfair dismissal rights has been changed from time to time. It started in 1971 as six months. It was increased in 1980 to one year (two years for small firms of 20 or less employees) and to two years (for employees of any employer regardless of size) in 1985. In June 1999 it was reduced back to one year.

Also in June 1999, the House of Lords held by a 3:2 majority in R v Secretary of State for Employment, ex p Seymour-Smith that the (then) two year qualifying period for unfair dismissal was potentially discriminatory against women, as women were statistically less likely than men to accrue two years' employment. However, they also held that the Secretary of State for Employment could justify the social policy behind the two-year threshold, namely opening opportunities in the labour market, which meant the two year qualifying period was permitted to stand. It is likely a similar result would occur today if the increase to two years was challenged.