Will no fault-dismissals help businesses to grow?

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Posted in:HR and Employment|May 23, 2012 | Join the mailing list

The idea of the "no-fault dismissal" was one of the suggestions put forward by Adrian Beecroft in a report on reducing employment regulation to help businesses have more confidence to hire staff and create more jobs.

Following a review of the report, the Government launched a call for evidence on whether current dismissal procedures are too onerous and complex, and also on the idea of compensated no-fault dismissals for businesses with less than 10 employees. This call
closes on 8 June 2012.

The proposal will in essence mean that micro-businesses will have the option of bypassing normal dismissal procedures and making a prescribed pay out to employees.  It would potentially provide employers with the freedom to sack employees almost instantly and
for no valid reason. Beecroft has claimed that radical changes need to be made to encourage employers to take on more staff and thus to grow.

Alison Loveday of Berg commented: "Introducing a hiring and firing culture could make matters worse in an economic climate where many employees are experiencing job insecurity and are struggling to raise productivity. Employment law is largely a matter of adhering
to rules of best practice and treating all employees fairly. In my experience, in many cases it is support and advice that small businesses and new employees need rather than providing them with additional dismissal powers.  Although some employers may welcome
the changes, employers should be aware that discrimination claims and other claims such as victimisation and whistleblowing, are not subject to any qualifying period and can be brought by an employee at any time during the course of their employment. Therefore,
it could potentially make small businesses more vulnerable to other employment tribunal claims which can be much more complicated and costly to defend." 

It has now been reported that business secretary, Vince Cable, has declared the idea "complete nonsense" and he has "all but confirmed" that the controversial proposals are to be abandoned by the Government. However, Prime Minister David Cameron is said to
be considering the proposals and other proposals in the report, which include changes to collective redundancy time scales, scrapping plans for flexible shared parental leave and reforms to the employment tribunal system.

To discuss how we can provide further advice in connection with these issues, please contact Alison Loveday, Partner and Head of our Employment team, by email to
alisonl@berg.co.uk or alternatively you can call Alison on 0161 833 9211.

The information and opinions contained in this article are not intended to be comprehensive or to provide legal advice. No responsibility for article’s accuracy or correctness is assumed by Berg or any of its partners or employees.
Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of the contents of this article.

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