Reducing job security won’t decrease unemployment

October 11th, 2011

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.

I 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.

This post was first published on Left Foot Forward on 4 October 2011.