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Confirmation that this issue is 'under consideration' came from Lord Young of Graffham, the  Government's 'enterprise adviser' on BBC radio on 1st November.  He was launching a document entitled Backing Small Business, which sets out a range of potential policies for supporting small and medium-sized businesses (although increasing the unfair dismissal qualifying period is not expressly mentioned in the document).

Lord Young is not due to report until spring 2011.  If his recommendations do include the qualifying period increase, this would most likely followed by a period of public consultation - possibly covering other employment law reform proposals as well.  The probable implementation date would then be October 2011.

On the other hand, now the idea has been officially floated, there is a chance it could be introduced much sooner than that.  No primary legislation is required - simply an order by a Government minister under s.209 of the Employment Rights Act 1996.

The proposal is, of course, highly controversial.  The qualifying period for unfair dismissal was reduced from two years to one year in 1999 - one of the early employment reforms of the previous Labour government led by Tony Blair.  Not only would it would be a highly symbolic move for the Coalition to raise it back to two years, but many businesses would regard this as unequivocally good news.

The Trades Union Congress has predictably opposed the suggestion, on the basis that there is no evidence that it would lead to the creation of any extra jobs.  But there are also some potential downsides from an employer perspective.  In particular, employees with less than two years service might instead resort to pursuing discrimination claims (e.g. age) and/or 'automatically' unfair dismissal claims (e.g. whistleblowing), for which there is no qualifying period.

A further possibility is that an increase in the UD qualifying period might be challenged as being indirectly discriminatory against women.  It is over ten years since the House of Lords ruled that the previous two-year qualifying period was justified on social policy grounds (R v Secretary of State for Employment ex parte Seymour-Smith and another [2000] IRLR 263).  Trade unions might be tempted to test the legal water again, if only for political reasons - a move that would prompt a fresh bout of litigation and unwelcome uncertainty for employers.

This entry was written by Richard Lister.

Photo credit: Diego Cervo