Doubling the time staff have to work for their employer before qualifying for legal protection from unfair dismissal would be a "major regressive step", experts have warned.
It emerged today that new "enterprise czar" Lord Young was considering recommending only allowing unfair dismissal claims from staff who have worked for their employer for two years - 12 months longer than current legislation - in an attempt to cut down on "spurious claims from former members of staff who have a grudge against their employer".
The move forms part of a wide-ranging review that will investigate ways in which government can remove barriers to growth faced by small firms and remove or minimise "regulatory and bureaucratic burdens which increase costs and hassle".
Speaking to the Today programme on BBC Radio 4 today (1 November), the Conservative peer confirmed that he would be examining the unfair dismissal system.
“Back in the 1980s when we did that, the result was that employment starting shooting up again,” he said. “I want to find out what small business people themselves think about this and then we’ll think about it.”
David Frost, director general of the British Chambers of Commerce, which represents small business, welcomed Lord Young’s review.
"The Government's move to bring together policies to support smaller businesses will be seen as a vote of confidence by the firms that really drive the UK economy," he said. "We are pleased that Lord Young will be leading the charge to remove barriers to small business growth."
However, John Read, employment law editor at XPertHR, warned that doubling the qualifying period to two years would be "a major regressive step for employee rights".
"It would mean that, provided they did not unlawfully discriminate or dismiss for an automatically unfair reason, employers could sack staff for whatever reason they wanted prior to two years' service.
"Legally speaking, the Government could affect the change easily - only an Order would be needed, not a new Act. But at a time when the economy is precariously stuttering to recovery and needs people in work, the proposal would face massive resistance from unions and other organisations that represent employees' rights, who may even bring a legal challenge. Perhaps most importantly, although it's early days, it's not completely clear what the Government's rationale would be for making such a change."
TUC general secretary Brendan Barber said there is "no evidence" that making staff wait for two years before they get protection from unfair dismissal will create any extra jobs.
"David Cameron's policies seem set on rolling Britain's workplaces back to the 1980s, and asking one of Mrs Thatcher's favourites to tear up employment protection will only confirm that impression," he said.
"What we need are quality small and medium-sized businesses that can grow into the big employers of tomorrow. Giving them permission to become second-rate employers will hardly help."
Resources on XpertHR
Changes to unfair dismissal rights were highlighted in the run-up to this year’s general election. Two XpertHR videos addressed this issue in detail, looking at what could be changed without the new primary legislation.
Outlook video: New Government
XpertHR's head of content Jo Stubbs and group editor David Shepherd discuss prospects for employment law and the workplace under the new coalition Government.
28 May 2010
Outlook video: Employment law under a new Government
With a general election due in the next few months, XpertHR editors Jo Stubbs and David Shepherd identify potential areas where current rules could be changed easily and therefore early in the life of a new administration.
9 October 2009