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Employment tribunal reforms will do little for job creation and add to rising insecurity

Stephen Overell

27 January 2011

For immediate release: 27 January 2011

Commenting on the government’s proposed reforms to employment tribunals, Stephen Overell, associate director – policy, said:

“Doubling to two years the length of time someone must work before they are entitled to basic employment rights will do little to encourage employers to create more jobs while adding to rising job insecurity.

“The effect of the move may well be a short-term reduction in the numbers of employment tribunal claims because people will have to work longer before they qualify for unfair dismissal rights. About a quarter of the labour force will have their legal position worsened.

“But its effect on job creation is likely to be very modest. According to the Organisation for Economic Co-operation and Development, the UK already has one of the most business-friendly frameworks of employment law of its member countries – second only to the US. Granting employers longer to decide whether they want to hire or fire someone does not automatically spur them to recruit more people.

“The package of reforms to tribunals is aimed at easing pressures on small firms, and perhaps as a kind of quid pro quo for planned changes to retirement age and parental leave, both of which have the potential to create more employment litigation. But it is actually medium sized firms (employing between 50 and 250 people) that generate disproportionate numbers of tribunal claims. The reason for this may be that they lack both the formal procedures of bigger firms and the informal, personal relationships often found in smaller firms. The risks to small firms from a tribunal claim are not in doubt, but it is mistaken to see them as the victims of an aggressive employment rights culture.

“Some of the smaller tribunal reforms are welcome – automatic referral of claims to Acas, for example. However both the changes to the qualification period and requiring employees to lodge fees will restrict access to justice when many more people are worried about their jobs.”



Notes to editors

1.   Stephen Overell is available for interviews and briefings.
2.   The Work Foundation is the leading independent authority on work and its future. It aims to improve the quality of working life and the effectiveness of organisations by equipping leaders, policymakers and opinion-formers with evidence, advice, new thinking and networks. In October 2010, Lancaster University acquired The Work Foundation, forming a new alliance that will enable both organisations to further enhance their impact.