Reducing job security won’t decrease unemployment


Sara Ibrahim is a barrister specialising in employment law

George Osborne’s plan A to stimulate economic growth has detoured into the realm of employment law. With a logic that it is hard to follow he declared that businesses would be encouraged to hire more staff by increasing the qualifying period for unfair dismissal claims from one year of employment to two. That way businesses can be comforted that vexatious litigants can’t get at them.

You see? Neither do I. Oh, and there is also going to be an issue fee which claimants can only get back if they win their case.

George-Osborne-corpseI am not alone in my cynicism. The equality and human rights commission confirmed in their response to the government’s consultation this year that the ‘efficiencies’ sought could lead to inequalities.

They expressed concern that men tend to have longer periods of service than women and that there could be indirectly discriminatory effects of this change. In any event, it ignores the fact that claimants can still issue discrimination claims without having to meet a qualifying period.

Despite this, there doesn’t appear to have been any consideration on the impact these policies will have. Not only will it squeeze access to justice, but also it could well dissuade those from low paid groups with good claims not to make them.

The uncomfortable fact is that women, young people and some ethnic groups are disproportionately represented among the low paid. In the words of Ed Miliband last week, we are not all in this together, as this latest announcement shows.

Given the cost of obtaining legal representation for tribunals, many claimants are often in person throughout. Making them pay to issue a claim as in the county courts ignores the usual imbalance between the employer and the employee. It could act to disincentivise all claims rather than those that are bad ones. Even if you do accept the government’s reasoning, then it is hard to justify why the proposed issue fees being mooted are higher than similar value claims in the civil courts.

Interestingly, Dr John Philpott, the chief economic adviser at the chartered institute of personnel and development, sees little merit in the proposal. He says that the evidence is that less job protection encourages hiring in boom periods but increased firing in bust periods. It therefore makes employment rates less stable during the economic cycle.

However, it does not change the fundamentals – the number of people in secure employment. He strongly takes the view that this will be detrimental for the long term prosperity of the economy by undermining any spirit of engagement between staff and management. It seems out a bad signal to people at a time when they are already feeling vulnerable.

Disputes in the workplace happen. The correct way to reduce claims is to increase mediation between the parties and ensure organisations comply with existing regulations. Preventing people from issuing unfair dismissal claims is a mistake. All it shows is a lack of commitment on the part of this government to access to justice and a disregard for the low paid.

If the coalition are looking for another policy to u turn on, this is it.

See also:

Gideon’s grotesque attempt to blame workers’ rights for unemploymentRichard Exell, October 4th 2011

The Right’s prescription of more of the same ignores the evidenceNicola Smith, July 26th 2011

Health and Safety cuts: Criminal businesses let off the leashSteve Tombs and David Whyte, March 26th 2011

Employment tribunal reforms will further erode workers’ rightsRuwan Subasinghe, February 7th 2011

Cutting workers’ rights will not increase employmentNicola Smith, January 10th 2011

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  • http://leftfootfwd Awake!

    yeah righto… the title flies against all common sense, but from a lawyer what does one expect? Whether it’s right or wrong we all know that when it’s easier to get tinned people do work harder, or if ther is higher unemployment also. What a twisted article… OR could it be that the employment barrister (who gets paid by the state i guess) is keen to encourage ‘mediation’ at every turn. Not for her the clear case of a dismissal, or accepting that people will abuse a free option…
    very poor standard cos no balence.

  • Stephen

    ablsolute codswallop – you have obviously never had to employ anybody – for small business these changes are a hurricane of fresh air!!!!!

  • Anon E Mouse

    No one in the shadow cabinet has run a business and this silly article shows why.

    Stop the press. A lawyer wants more litigation paid for by the taxpayer.

    Wow there’s a first….

  • scandalousbill

    Anon plus trolls @1 and @2,

    Your responses ignore some salient points made by Dr Philpot of the CIPD who notes:

    “Increasing the qualifying period for obtaining unfair dismissal rights thus runs the risk of reinforcing a hire and fire culture in UK workplaces which would be detrimental to fostering a culture of genuine engagement and trust between employers and their staff and potentially harmful to the long-run performance of the UK economy. Although the policy change will undoubtedly be welcomed by the de-regulation lobby, it isn’t the way to boost growth and jobs.

    “In addition, it is unlikely that raising the threshold from one to two years will have its intended effect of reducing the number of employment tribunal claims because employees are increasingly bringing claims linking unfair dismissal with discrimination claims which can be made from day one of employment. ONS figures suggest that an extra 12% of employees would potentially be denied the chance to claim unfair dismissal due to length of service as a result of the change – hardly likely to make much of a dent in overall tribunal numbers given that only a small proportion of these would make any claim.”

    http://www.cipd.co.uk/pressoffice/_articles/unfairdismissal031011.htm

    Thus while the actual impact as estimated by the OBS is low, the political bias of employer organizations such as the CBI seems to have little basis in fact and more to do with a desire to enable management despotism. Only a breath of fresh air for those of very limited business capability.

  • scandalousbill

    Sorry about the typo should read ONS

  • Anon E Mouse

    scandalousbill – What’s happening is the nonsense of 13 years of Labour rules and general control freak stuff are being brought to an end (if they actually do what they say).

    Even if it doesn’t increase jobs who cares. It’s just another aspect of our lives that needs reform. Personally I’m awaiting the “Bonfire Of The Quango’s” but see no sign yet….

  • resident leftie

    Can we have a new unpleasant photo of Osborne, please? I’m getting a bit bored of this one.

  • Leon Wolfson

    @2 – I have. And these rules increase will increase stress levels and hence reduce productivity at so many companies… employers get to treat people like shit for a full year longer, and to lay them off with no repercussions at the end of that time with no comeback.

    Just 14% of EAT claims in FYI2010 were unsuccessful at a hearing. This is, plain and simple, a way to stop many claims being brought. If your employer hasn’t been paying… well, how DO you afford £1,250 for example?

    I’d have been caught both times I had to file for a tribunal by this. I’d have been left with, literally, no way to afford to force them to pay me!

    Keep on supporting screwing over poor workers, though!

  • http://leftfootfwd Awake!

    ah yes, it’s all about ‘employers get to treat people like shit for a full year longer, and to lay them off with no repercussions at the end of that time with no comeback.’ nasty tories (yawn)
    And from Dr Philpot
    ‘the political bias of employer organizations such as the CBI seems to have little basis in fact and more to do with a desire to enable management despotism. Only a breath of fresh air for those of very limited business capability.’

    So the CBI wants it JUST to be nasty?? Is this the same nasty CBI that for years pleade with govt that kids leaving school weren’t prepared?
    Seriously, this prof wants us to belive that the cBI wants this ruling PURELY to be nasty… very credible rom the armchair business man

  • scandalousbill

    Anon and Awake!

    What Dr. Philpott has pointed out is that the risk factors cited by the CBI and other employer groups have cited in support of curtailing worker’s access to tribunal in cases of unjust dismissal are marginal at best. He also highlights the deterioration of employer/employee relations as a potential and greater problem for the UK economy.

    Enshrining Mr Bumble in legislation is not a reform, it is a regression. It does little more than placate CBI membership. It provides little to bolster the UK economy.

    The problems of UK business pertain more to a decline of innovation and an absence of fresh ideas as opposed to the actions of disgruntled employees. It is not that innovative ideas are not present nationally, but more to the fact that they are unsupported. CBI membership is populated more by process administrators than by innovators.

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  • http://bobblackmanmp.info/ Jonathan

    The Government has dealt a hammer blow to workers rights. How can employees afford over £1,000 for a hearing, when employers are already treating workers like they did in this case http://is.gd/gWac7Z which happened under existing legislation.

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  • http://tia-junior2.blogspot.com/ Tia Junior

    The PM seems to think that industry is riddled with underperformers that are dragging back growth or force their employers through time consuming and expensive tribunals when they have no case are are just angling for a settlement. I have however never seen any data that backs this up. On what information is the PM drawing – surely not just the “word” of a few business associates?
    Ironically, the only area where I have generally found this kind of problem is in the public sector.
    Yes, as always there will be a few chancers, but in my own extensive experience, the incompetence is far more with employers who either do not approach recruitment methodically, fail to make their expectations clear during and after recruitment and do not give employees sufficient guidance and support once in post. There is nothing wrong with the present legislation for a good employer and it encourages all employers to act responsibly – yes, the process you have to go through can be a bit frustrating at times, but this is a small price to pay.
    This legislation effectively sanctions poor management and says “if you cock up recruitment, don’t worry just sack them and try again” and “you can legitimately dismiss someone completely unfairly without any worries”. What about the poor souls who have moved house, left their roots behind, changed their kids’ schools only then to find they are sacked on a whim with just the limited protection of an employment contract, with no parachute payments or any other safety net?
    Does the PM honestly regard this as fair?

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  • Neil H

    I’ve actually been through 2 tribunals as an employer. Both were redundancies handled with absolute integrity. The opporunity to fire people is not why people start businesses. It’s awful. We tried to be open , flexible and all the other good stuff the CIPD et al like to see. We’d already exhausted ,no overtime, reduced hours etc. In the real economy, where you need orders to make profits and create value added, if your costs are higher than your revenues, for long enough, people generally get made redundant. Both claims were dismissed. A small sample I know, but both claims were entirely unfounded.

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  • Richard

    Neil H – that’s your partisan version of the cases of course. Now what is it you’re not teling us?

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