David Cameron has rejected controversial proposals – set out in a leaked Government report – to replace the right to claim unfair dismissal with new “Compensated No Fault Dismissals” in order to boost economic growth, the Financial Times reports.
However, it is reportedly still likely that “one or two” ideas from Beecroft’s report could yet come to fruition. Indeed, Conservative MP Chris Grayling suggests that “we need to accelerate the work on employment law.”
Cameron ‘draws a line’ under the Compensates No Fault Dismissals controversy
The Financial Times says that Cameron’s decision to reject the Compensated Unfair Dismissal proposals sees him “finally drawing a line under a corrosive debate at the heart of government about just how far the coalition should go to inject life into Britain’s stalled economy.” It says:
On Wednesday [9 November 2011] Mr Cameron tried to draw a line under the feuding. Asked by Liberal Democrat MP Julian Huppert whether a ‘fire at will’ employment policy would reassure 25m people fearing the threat of unemployment, Mr Cameron said: “I want to make it easier for companies to hire people.”
Dr Julian Huppert (Cambridge) (LD): The Prime Minister is rightly concerned about jobs and growth. Crucial to that is consumer confidence. Does he think that telling 25 million workers that they have no job security and can be fired at will tomorrow will boost or reduce consumer confidence?
The Prime Minister: Clearly, we have to make it easier for firms to hire people. That is why we have scrapped Labour’s jobs tax, taken 1 million of the lowest-paid people out of tax, established new rules so that someone can go to a tribunal only after working somewhere for two years, and introduced fees for claims in employment tribunals to stop vexatious claims. Added to that, we are investing in the Work programme and apprenticeships – all as a way of helping to give young people jobs.
Beecroft controversy: ‘A masterclass on how not to run a coalition government’
Venture capitalist Adrian Beecroft’s proposals to replace the right to claim unfair dismissal with Compensated No Fault Dismissals as a means to boost economic growth have been heatedly debated since they were first leaked a little over a fortnight ago:
- The Institute of Directors (IoD) and Luke Johnson of Risk Capital Partners came out strongly in favour of the Compensated No Fault Dismissal proposals. The proposals were initially reported to have the support of Cameron and of Chancellor George Osborne.
- The proposals were criticised as potentially costly to employers, likely to cripple the UK labour market and reportedly caused significant rifts to appear within the Coalition Government (both between the Conservative Party and the Liberal Democrats and within the Conservative Party itself).
- However, Anya Palmer notes that Labour has kept comparatively quiet on this matter. She says: “As for Labour, shadow business secretary Chuka Umunna called the Beecroft proposal ‘ludicrous’, but if Labour is opposed to the other proposed reforms it has yet to say so. Indeed Umunna specifically stated that Labour is not opposed to employment tribunal reform.”
- The Guardian reports that “senior Whitehall sources” view the Coalition Government’s handling of the Beecroft report and its repercussions as “a masterclass [...] on how not to run a coalition government.”
- The Telegraph’s Benedict Brogan notes that the rejection of the Compensated No Fault Dismissal proposals represent a setback in the Coalition Government’s “search for growth.”
Other Beecroft proposals could yet see light of day
But the Beecroft story is by no means over yet. The FT reports that Cameron’s rejection of the Compensated No Fault Dismissals proposals does not mean that the rest of the Beecroft report has been junked:
Allies say Mr Cameron has played down a controversial report by Adrian Beecroft – a Tory donor and venture capitalist hired by Mr Hilton to ginger up the debate on employment law; no more than “one or two” ideas in the unpublished report were likely to see the light of day.
We noted when this story first broke that the two leaked pages of Beecroft’s report that have emerged so far only include a summary of his proposals as regards unfair dismissal. It remains to be seen what the other key issue in “encouraging growth and employment” identified by Beecroft might be.
Further detail as to some of the other recommendations set out in Beecroft’s report are now slowly emerging. The Telegraph reports that Beecroft came up with 20 proposals in total. It says that Beecroft’s other recommendations include the following:
The Beecroft report contains 20 recommendations, many of which focus on lifting employment regulations on small employers. It also advocates reducing the impact of laws that will force small companies to provide pensions for workers. Other measures include scrapping the requirement to check the immigration status of workers.
Indeed, the Coalition Government is currently preoccupied with the challenge of how to reinvigorate growth in the run-up to Osborne’s autumn statement on 29 November 2011. It remains to be seen if Osborne will announce any measures relating to the reform of any aspects of UK employment law.
Grayling: ‘We need to accelerate the work on employment law’
Recent signals from the Conservative Party suggest that it still has its sights trained on employment law.
“We need to accelerate the work on employment law.” This is according to Conservative MP for Epsom and Ewell Chris Grayling, in a recent interview with the Daily Telegrah. Grayling used the interview to voice his support for Beecroft’s proposals, and to call for a “big bang approach on regulation.”
Grayling said he wants to see “a situation where the fault isn’t always with the employer, that the employer is always wrong … I think there needs to be much greater levels of responsibility of the individual.”
In Grayling’s view:
We’ve got a very poor record on unnecessary red tape; extra cost to business; people being asked to do things they don’t need to; over the top regulation, misinterpreted regulation, poor guidelines. And we’ve made a start … but I hope that what we are about to do now is take a real step forward and to accelerate … We need to accelerate the work on employment law as well.
UPDATE 1 (Thursday 10 November 2011):
Vince Cable has stated in a Radio 4 interview earlier today that we will have to wait for Osborne’s autumn statement – to be delivered on 29 November 2011 – for an “absolute commitment” as to whether or not the Coalition Government plans to push ahead with the Compensated No Fault Dismissal proposals. This is according to a transcript of Cable’s Radio 4 interview, put together by Anya Palmer. According to the transcript, Cable said:
[W]e’re not making an absolute commitment at this stage, I think we will have to wait for what the Chancellor says at the end of the month, but I have made it very clear that I don’t think that you encourage confidence in the workforce if they are massively insecure, but we have got to look at the technical proposals and judge them on their merits and look at evidence, because policy has got to be rational…
He also made mention of a proposal to reform the employment tribunal system, put together by his own department. According to the transcript, Cable said:
[M]y own department has come forward with a serious proposal for reforming tribunals, so that small businesses do not get sucked into very expensive time-consuming tribunals around the dismissal process, and we are also saying that people have to work for two years for an employer before they have access to the tribunal unfair dismissal system. We are thinking of other ideas too for helping to resolve disputes in the workplace in a way that do not create excessive bureaucracy and difficulties for employers. But I have also made it very clear that a general measure that creates large scale insecurity and worries about job security is not helpful.
Compensated No Fault Dismissals >> Read more on Beecroft’s proposals:
- Replace right to claim unfair dismissal with Compensated No Fault Dismissals, says leaked report commissioned by David Cameron The right to claim unfair dismissal should be replaced by new “Compensated No Fault Dismissals” in order to boost economic growth, a leaked report commissioned by David Cameron recommends. This is according to an article in the Daily Telegraph.
- Anna Birtwistle: Why Compensated No Fault Dismissals could cost employers dearly Solicitor Anna Birtwistle presents her own perspective on Beecroft’s recommendations that unfair dismissals be replaced with Compensated No Fault Dismissals. She argues that these proposals – if enacted – could cost UK employers dearly.
- Are unfair dismissal rules really holding employers back from creating new jobs in 2011? How likely is it that Beecroft’s proposals, if enacted, would stimulate growth? And where is the statistical evidence to back up the report’s claims that the current unfair dismissal rules are holding employers back from creating new jobs in 2011?
- Beecroft update: Nick Clegg vetoes Compensated No Fault Dismissal proposals
- Compensated No Fault Dismissal proposals mask UK’s ‘crisis of management and leadership skills,’ says CIPD The CIPD has rejected Beecroft’s proposals, arguing that they distract from the real issue: the UK’s “crisis of management and leadership skills.”
- Nick Clegg’s “protected conversations” proposal: 15 reasons why this won’t work By XpertHR’s Stephen Simpson, writing on the Tribunal Watch blog.
- Beecroft update: Compensated No Fault Dismissal proposals to be ‘pushed through’? Immigration checks to be scrapped?
- Will the removal of employment rights see a rise in union membership? Writing on the Flip Chart Fairy Tales blog, Rick explores a potential unintended consequence of any decision to enact Beecroft’s proposals: Could they drive UK workers back to trade unions? Rick argues that”it would be surprising if some workers, having been deprived of their employment rights, did not seek the protection of a trade union. Much of this will depend on the behaviour of employers. If, the day after the measure becomes law, there is a mass dismissal of all the ‘dead wood’ and ‘slackers’, it might be enough to throw a formerly compliant workforce into the arms of a trade union.”
- The right to claim unfair dismissal is under attack – but where is Labour? By barrister Anya Palmer, writing in the Guardian.