Potential Increase of Unfair Dismissal Qualifying Period to Two Years

1 November 2010

As it stands, the qualifying period for unfair dismissal claims is at least 2 year’s continuous service. However, over the weekend, it was leaked that the government are considering proposals to increase this period to two year’s continuous service.

Confirmed this morning by various newspapers and radio stations, David Cameron plans to pitch this doubling of the qualifying period as part of a “pro-business” crusade to increase UK competitiveness and reform the economy. A time frame for the decision has not yet been given.

The government has yet to comment on the leak.

If the change takes place, it would reverse the reduction of the qualifying period by the previous Labour government in 1999 as part of the Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order of 1999, SI 1999/1436.

At first glance, the change is beneficial for businesses but unfavourable for employees as it, theoretically, gives employers an extra year to unfairly dismiss an employee. However, claims for discrimination or unfair dismissal with no qualifying period can still be brought. These claims are often more costly to defend and thus, which party will benefit the most is yet to be determined.

Since 1971 (when it was introduced as 6 months), the qualifying period has changed several times. In 1980 it was increased to one year for firms with less than 20 employees (2 years for those with more) and in 1985 to two years for all firms.