Ben Smith, Senior Associate, said: “These proposed changes signal a significant shift in the employment law landscape – and, if implemented [as they currently stand], would be something of a shock to many employers.”
“Dismissals before two years’ service tend to be more straightforward but under these proposals, employers will much more frequently have to implement a more formal process to dismiss. Employers will likely have to implement time and resource-intensive processes at a scale that is radically different to the current status quo.”
“Many employers may not have the experience or capacity for this and would face a steep learning curve.”
Smith added that Labour’s current plan to remove the cap on compensation for unfair dismissal claims (currently 12 months’ pay or around £115,000, whichever is lower) would make the consequences for employers who make missteps more expensive, encourage more claims, and make it more difficult to resolve claims without the need to go to tribunal.
Smith adds that the proposal could also create “a more agile workforce, with employees more willing to move between jobs if length of service becomes less tied to employment protections.” This, he said, may prove to be “both a blessing and curse for employers, making it easier to attract talent but more difficult to retain it.”
Smith said that the proposals could add to the backlogs at tribunals and delays in employment cases that would be “very frustrating for employers and employees alike.”
As Labour consults with business leaders and unions over the final form of its New Deal, HR will need to keep abreast of any changes likely to be in the pipeline, said the firm.
