Ace Business Desk – In Short – Employers are preparing for a wave of pre-Christmas redundancies as businesses rush to avoid tougher unfair dismissal laws that come into force on Jan 1. Companies fear the changes could expose them to unlimited compensation claims, prompting some to get rid of highly paid staff before the deadline Telegraphs Melissa Lawford, Economics Correspondent, has the details below.

Employment lawyers say job losses are already running at up to twice the usual rate.

Employment lawyers expect a Christmas Eve clear-out across offices before Labour’s Employment Rights Act takes effect on Jan 1. This, they say, will be the tipping point for a wave of job losses.

Two key changes to the unfair dismissal claims process will come into effect from the start of next year: a cap on claims for unfair dismissal, which is currently set at £123,543, will be scrapped; and the time a worker needs to have been employed before they can make a claim for unfair dismissal will be lowered from two years to six months.

The first change means people will be able to lodge tribunal claims for potentially unlimited sums if they feel they’ve been wrongly let go. And the second change means many more will be able to do so.

Bosses are terrified they will face a surge in multimillion-pound claims that could bankrupt start-ups or swamp financial services firms in protracted legal battles.

To protect themselves, they are dismissing highly paid staff pre-emptively. Employment lawyers say staff turnover at some companies is as much as double normal levels in the run-up to Christmas.

Companies are also pulling back on hiring, cutting probation periods and enforcing ruthless performance reviews to weed out the worst staff.
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