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Chancellor’s cuts to costly tribunals could ‘choke’ firms

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Following the Chancellor’s announcement last week on sweeping changes to the UK’s employment tribunal system, employers should be warned the proposals carry ‘concealed and complex risks’.

George Osborne announced the changes at the Conservative Party Conference. The alterations will see, from April 2012, qualifying periods for unfair dismissal claims rising from one year to two. The Chancellor also announced radical plans for April 2013, when claimants will be charged a fee to lodge a claim.

Osborne claims the alterations will save UK business £16m each year.

Predictably, the Chancellor has used the party conference season to usher in a major review of workplace laws and emphasise their commitment to cutting red tape. That is a move I think everyone applauds, especially businesses who wish to see a reduction in the number of employment tribunal claims.

However, following the initial positive responses from business commentators, the inevitable 'grey areas' have come to light - a number of concealed and complex risks firms across the country must be wise to.

For example, the new two-year qualifying period for an employee to bring an unfair dismissal claim comes into force from April 2012. But we now have a window of six months which could see a massive rise in the number of unscrupulous claimants determined to beat the timetable.

There is also a risk that with the two-year qualifying period only covering unfair dismissal claims, firms could be choked by many more discrimination or whistleblowing cases - two areas which do not have qualifying periods and which were not covered within Mr Osborne's announcement. It is all well and good to believe unfair dismissal claims will fall by around 2,000 cases per year, but what of those which will quietly rise?

On the side of the employee, the new fees, due to come in around April 2013, are also far from transparent. There will be smaller fees of around £250 to actually lodge a claim, but those could rise to £1,000 if the claim goes to a hearing - with fees stretching into five-figure territory where the claimant is seeking £30,000 or more in compensation.

My worry is that again, the fees themselves provide another hurdle. We could see genuine claimants unable to afford to make a claim.

There was euphoria within certain sections of the business sector when the Chancellor's plans were announced. And many businesses, no matter what, will stay happy with the changes. But it is only until they look beyond the banner headlines and billboards and into the detail that it will become clear Mr Osborne's announcement isn't as clear cut as business leaders wanted."

A consultation, led by the Ministry of Justice, is now underway to help agree the appropriate fees for tribunal claimants. They will report back on their findings before the end of November this year.

Sally Morris, partner and head of the employment division at Midland law firm MFG Solicitors