Unfair dismissal as a day one right

The current law surrounding unfair dismissal is currently a restricted right as it only applies to employees who have at least two years’ continuous service.  To prove an employee has been unfairly dismissed, they must be able to show their employer committed one of the following:

• There was no fair reason to dismiss; and / or
• Their employer did not act reasonably in treating that reason as a reason to dismiss, which is mostly about whether the employer followed a fair procedure.

The two year qualifying service rule was introduced in April 2012 under the Conservative Government, increasing it from the previous one year of qualifying service.

The new Labour Government has proposed to scrap the qualifying period for unfair dismissal altogether and replace it with protection for employees from day one of their employment, potentially waving goodbye to probationary periods.  Labour, in its green paper, named ‘A New Deal for Working People’, has said it proposes that, “All workers, regardless of sector, wage, or contract type, will be afforded the same basic rights and protections”.

So, what implications may this have on employers?

This is a radical change and will require employers to reconsider their approach to recruitment, induction, probationary periods and dismissals.

There will inevitably be increased litigation and therefore a burden of increased costs to employers in defending claims for unfair dismissal.  Employers should review their policies that may be relevant to dismissal, such a capability / poor performance and disciplinary policies and check whether they exclude probationary dismissals.  If they do, this will need to be updated.  Bear in mind that policies are not just for employees’ benefit.  Consider if your policies provide sufficient guidance for managers to follow when considering dismissals.

The ACAS code of practice on disciplinary and grievances will also have to be considered for probationary dismissals relating to misconduct or poor performance.  A failure to comply with this can lead to increases in unfair dismissal compensatory awards of up to 25%.

Employers should review their approach to recruitment.  The potential consequences of hiring new employees who turn out not to be the right fit for the job will be much higher without the protection of the two year qualifying period.  Better hiring decisions will need to be made.

How will a probationary period tie into the day-one unfair dismissal right?

There may be some relief for employers though.  The Government has said that it will be possible to fairly dismiss new hires during their probationary period “with fair and transparent rules and processes”.

It is unclear what this will mean in practice.  It seems unlikely that it would mean that unfair dismissal protection does not apply during any probationary period.  As employers could start introducing longer and longer probationary periods to delay the employee qualifying for unfair dismissal protection, which would undermine the reforms.

It may be that the procedural requirements for a probationary dismissal will be relaxed.  This would recognise that it is unrealistic to require an employer to follow the same length of capability process in respect of a new recruit who is already underperforming, compared to what is expected with a long standing employee.   This could get confusing though if it means there is a new set of rules for dismissal during the probationary period that employers will be expected to grapple with.

The honest answer is, we don’t know how this will look yet.  It is yet to be announced by the Government how they intend to implement a probationary period, if any, into their proposals.  As ever, the devil will be in the detail.

The Employment team at Thomson Snell & Passmore eagerly await the developments over the next coming weeks and months.  If you have any questions about this new change, or any other employment law issue, please do not hesitate to get in contact with a member of our Employment team.

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