Cost of unfair dimissal claims for employers rising | LabourBlawg

An even tougher year for employers with employment law

by evolvedlegal on May 25, 2012

Whilst there has been a lot written about the Beecroft Report, particularly some very hostile responses to it, and whilst the qualifying period for unfair dismissal claim has risen to 2 years from 6th April 2012, it looks as though things will remain tough for employers for at least 2 years to come. Why ?

Firstly, with the new 2 year qualifying period,  this will only apply to workers who start employment after 6th April 2012, which means that those employees employed before that date still only need 1 year continuous employment  and the “benefits” of the new law are unlikely to help employers for at least a year.

The other big and largely unwritten about issue with unfair dismissal is that even though the number of claims may reduce, the value of the claims is likely to have risen and to keep rising, making settlements and compromise agreement solutions more difficult.

Unfair dismissal law and compensation almost exclusively is linked to the level of losses the employee suffers  – in other words, even if the employer unfairly dismisses the employee, in the absence of a successful discrimination claim, if the employee gets a job quickly, he or she will have their claim limited to the period of loss or difference between a higher amount earned at the employer who unfairly dismissed and what they are now earning.

With the low unemployment environment we did have until a couple of years ago, most unfair dismissal claims which succeeded were worth less than £10,000.00, and this meant it was common for a deal to be done, at an early stage, before significant legal costs were incurred, by virtue of a compromise agreement, typically which would pay out the equiivalent of 2-3 months salay as an inducement to sign. However, the employment marlket has deteriorated markedly so the prospects of an employee finding a new job quickly are often not that good – this creates uncertainty both for employer and employee, makes agreeing a compromise agreement potentially more difficult and may lead to higher value claims and those claims being settled, if they are settled, further down the line at a time when possibly significant legal fees have been incurred.

Whilst most would agree that some of the concepts in the Beecroft Report are pretty radical and potentially very harsh on employees, as things stand, in these difficult economic times, in many ways the employee still has the upper hand in employment law.

This post courtesy of Darlingtons employment solicitors.

Previous post:

Next post: