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Government may restrict unfair dismissal claim rights

The Government's new advisor on small businesses could recommend an increase in the length of time employees have to work before being allowed to bring unfair dismissal claims.01 Nov 2010

Employees can currently take unfair dismissal claims against employers once they have been in their jobs for a year. The Government's just-appointed small business advisor Lord Young confirmed to BBC Radio this morning that he might recommend preventing such claims until workers had been employed for two years.

The Government said that it had appointed Lord Young to his unpaid advisory post to "ensure the economic contribution that small and medium-sized businesses make and the issues they face are recognised at the very heart of government".

Lord Young said that he would have to consult with small businesses before making any recommendations but confirmed earlier leaks that the increase in the amount of time employees have to work before being eligible for unfair dismissal claims was "one of the lines" he would investigate.

"Back in the '80s when we did that, the result was that employment starting shooting up again," said Lord Young on BBC Radio 4's Today programme. "I want to find out what small business people themselves think about this and then we'll think about it."

The move could relieve businesses of some obligations to employees but the effect might not be as significant as the Government hopes, according to employment law expert Kirsty Ayre of Pinsent Masons, the law firm behind OUT-LAW.COM.

"I think what we would be likely to see is a small reduction in the number of unfair dismissal claims in the one to two year period, but a corresponding increase in the number of discrimination claims," said Ayre.

"The number of standalone unfair dismissal claims we are seeing is decreasing. Increasingly they are coming with discrimination claims tagged on; that means that there is unlimited compensation and the possibility of claiming for injury to feelings," she said.

Ayre said that Lord Young might be told by companies that they want to see the lengthening of the service requirements for unfair dismissal claims, but that this may not make a major difference to companies.

"On the face of it this will be welcomed by employers because it gives more flexibility and a longer period of probation for staff," she said. "But in the longer term I think this won't significantly reduce the number of claims it will just change the type of claims, and we'll see more with a discrimination element."

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