Sackings feared in race to beat law

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The Independent Online
LAWYERS are advising companies that it may be better to sack unwanted staff before the end of May before they are entitled to claim up to pounds 50,000 compensation under new government rules.

Reform of the industrial tribunal system, which takes effect on 1 June, will allow staff to bring a claim of unfair dismissal after just one year of employment. Shortly afterwards, the maximum compensation payment for unfair dismissal is to be increased from pounds 12,000 to pounds 50,000. Under current law, employees who have worked less than two years for a company are not entitled to statutory compensation.

A circular from the law firm Thomas Eggar Church Adams, of London and Sussex, says that "employment lawyers are advising companies to dismiss unsatisfactory employees before the end of the month".

Liz Evans, an employment specialist with solicitors Beachcroft Wansbroughs, said: "There are rumours that law firms are advising employers to get rid of staff before it [the compensation] goes up to pounds 50,000. It's a point for clients to consider."

The changes form part of the Government's Fairness at Work legislation, which is aimed at boosting workers' rights. Under the stewardship of the former trade and industry secretary, Peter Mandelson, the policy was a subject of hard bargaining between the Confederation of British Industry and unions. At one point the Government hinted that there would be no upper limit to the compensation.

But not all lawyers agree that this is how firms should be reacting to the new law. Lawrence Davies, a senior employment solicitor who has acted in a number of high-profile claims brought by employees, described this approach as an "immoral knee-jerk reaction". He added: "It shows employment law is much more about saving money than exercising employment rights."

Adrian Roberts, an employment-law barrister, said: "The best advice you can give an employer is make sure they dismiss someone fairly." Economic realities meant that companies had to weigh the impact on industrial relations against costs that could be saved by dismissing staff before the deadline.

Mr Davies said the timing of the introduction of the qualification period may have been designed to pre-empt a ruling by the House of Lords next month which is expected to bring down the qualification period even further.

It may already be too late for employers to beat the 1 June deadline, as the necessary dismissal notice period of one month will run into the qualifying period. This could lead to more dismissals on trumped-up "gross misconduct" charges.

Lawyers predict that, whatever happens, the new qualifying period will lead to more cases coming before tribunals.