By Joanna Alexiou, Senior Associate and Head of Employment, Mackrell.Solicitors

The recent proposal by the Labour Party to make claiming unfair dismissal a day-one right for workers in the UK is far more complex than it appears – with the potential to plant a minefield for employers.

Currently, employees have the right not be unfairly dismissed, once they have two years’ continuous service. There are five potentially fair reasons for dismissal, and it is for the employer to establish the reason for the dismissal, and that they acted reasonably in treating that reason as a reason to dismiss the employee.

There are some specific exceptions to the above scenario. In these cases, dismissal may be ‘automatically’ deemed to be unfair. For example, where a dismissal is because the employee is on, or plans to take a period of maternity leave. For the majority of automatic unfair dismissal claims there is no minimum period of service and therefore these types of claims can be brought from day one of employment.

If employees were also able to bring any other type of ‘ordinary’ unfair dismissal claim from day one of their employment, this would undoubtedly lead to an increase in the number and type of claims that employees are able to bring from an early stage in their employment.

The current intention is for the right to be introduced “subject to qualifying probationary periods”, which raises the question of whether employers need to change the way they approach their newest employees and employer’s use of probationary periods.

The issue of probation

Employers would attempt to counteract the effect of this day one right by increasing both the use and duration of probationary periods for new starters or extending the current probationary period. The rationale behind this would be to enable employers to properly assess the suitability of an employee for their organisation which would likely decrease the risk of employment issues arising further down the line.

Employers are also likely to extend probationary periods beyond current industry standards, which can range between two and four months, up to six to twelve months for senior-level positions.

If the right to claim unfair dismissal is available only once the employee has completed the probationary period, then employers would likely be stricter with monitoring of probationary periods and ensuring that they properly communicate to their employees the reasons for not passing these and addressing performance issues promptly.

A new way of working

Dismissal within the current two-year period does not always relate to performance or disciplinary issues. Businesses often form new roles with some uncertainty as to their long-term potential and ongoing need for the role.

With new staff able to claim unfair dismissal from day one, employers would need to ensure that they have robust workplace policies in place in order to address issues relating to performance, disciplinary and equal opportunities. Employers would be advised to ensure that they have robust and fair procedures in place which must apply to all employees in equal measure, regardless of length of service. Employers would also need to ensure that managers and senior leaders receive sufficient training on how to implement fair policies and procedures in order to minimise disputes and the risk of claims. Ultimately, this would hopefully result in higher standards for both employers and employees.

For this reason, employers are likely to implement more stringent recruitment procedures to assess a prospective employee’s fit and suitability – with an increase in training on issues such as management and equal opportunities to minimise employment relationship breakdowns.

Such events are often contributing factors to employee dismissals and disputes.

However, this should not be seen in a negative light. Despite challenges, overhauls which result from this policy may well drive positive cultural changes in the workplace. Employees would feel more committed and valued and this would likely increase their productivity. This may also result in reduced staff turnover, with employers’ recruitment costs driven down as a result.

Protection for employees and employers

In creating a new legal obligation for employers, this day-one right would bring in the need to closely monitor and implement fair procedures and processes in order to address possible disciplinary or performance issues before ultimately dismissing employees.

Existing contracts would also need to be audited regularly for tight termination clauses.

This would invariably put employers in a stronger position if an employee bought an unfair dismissal claim. The removal of the two-year qualifying period for unfair dismissal claims would also lead to even higher use of settlement agreements to resolve a situation where a dispute has arisen.

The future of employment?

As well as increased probationary periods, employers may seek to engage staff on an altogether different basis. The right to bring an unfair dismissal claim is only available for those who are genuine ‘employees’. Therefore, employers may also look to engage more staff on a self-employed basis in order to circumvent this right altogether.

Employees would benefit from this change as they would have greater protection if their employment was terminated at any time once they are outside their probationary period.

That said, through an employer’s lens, such a policy would likely increase tribunal claims and therefore costs, increase training costs among others and would likely have a disproportionate impact on smaller businesses.

Further down the line, day-one unfair dismissal rights may lead to a decrease in unmeritorious claims, such as discrimination claims which  do not have a qualifying period, and are sometimes used by employees as a way to pursue a claim against their employer when they do not have the qualifying period to bring an unfair dismissal claim.

I would advise any employer concerned about complying with any aspect of employee rights and obligations to get in touch and discuss how they and their employees can remain protected.

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