However, its approach to employment law reform could also be viewed as a "war on how we work", argues Sunday Telegraph Business Editor Kamal Ahmed.
Ahmed says that these reforms are ultimately intended to enshrine a view that - at its simplest - "employers should be allowed to get on with managing their companies."
Here we take a look at recent employment law reform proposals and consider how they relate to Ahmed's theory and assess the potential impact of some of these proposals on economic growth.
Overview of recent employment law reform proposals
Recent weeks have seen a number of major announcements on employment law reform:
- The Queen's Speech included a raft of business legislation, which the Government said was aimed at "creating the right conditions for businesses to grow and succeed". These include measures to "overhaul the employment tribunal system, cut unnecessary red tape for businesses and reform directors' pay." XpertHR provides detailed guidance on the Queen's Speech and its implications for employment law and on the specific reforms relating to employment tribunals.
- Venture capitalist Adrian Beecroft's Report on Employment Law, which proposes many radical reforms intended to boost growth (and from which the concept of compensated no-fault dismissals originated) finally saw the light of day. The report generated widespread controversy, including upheaval within the Coalition Government.
- The Enterprise and Regulatory Reform Bill included details of proposed measures aimed at "improving the employment tribunal system". You can read analyses of the Bill from XpertHR, Personnel Today's Laura Chamberlain and from lawyer Laurie Anstis.
- Unfair dismissal compensation could be slashed. Barrister Anya Palmer argues that one proposal within the Enterprise and Regulatory Reform Bill, if enacted, would pave "the way for a major reduction in employment rights"
in the future. Palmer points out that the Bill "contains a provision
that would give the Government a very broad power to slash compensation
for unfair dismissal to a third of its present level at any time in the
future, without further debate." She says that this provision may not
come into effect in the near future, but notes that "it's not
unreasonable to suppose that if the Conservatives won the next election
they would promptly reduce the limit across the board." Palmer has also written a related article for Solicitors Journal, entitled Stealth tactics: making unfair dismissal worthless. Here, she notes that "the Government is consulting on a wide range of measures as part of the employment law review, but there has been no consultation on changing the level of compensation. The proposal to reduce compensation simply appeared unannounced in clause 12 of the Enterprise and Regulatory Reform Bill."
- 'Settlement agreement' proposals: The Guardian reports that today's second reading of the Enterprise and Regulatory Reform Bill in the House of Commons will additionally include a proposal to introduce 'settlement agreements' for all employers. It says that the proposed 'settlement agreements' will make "it easier for companies to sack their workers by offering them immediate payouts if they agree to leave without any fuss." However, legal expert Darren Newman argues that the 'settlement agreement' proposals represent nothing more than a "cosmetic change" to employment law. He says: "As currently drafted, the only the change that the Bill makes to the current system is to change the name of 'compromise agreements' to 'settlement agreements' - which is the absolute epitome of a cosmetic change. It has no practical or legal impact whatsoever." (See Update 19 to my Beecroft post and Government to unveil 'settlement agreements' for dismissals by Personnel Today's John Eccleston for further details).
The Guardian's Phillip Inman argues that the proposed employment law reforms set out in the Queen's Speech can be viewed as part of an ongoing project shared by a number of European governments to pursue "growth built on cuts in workers' terms and conditions".
This view would appear to be borne out by William Hague's statement in a May 2012 interview with the Daily Telegraph that radical reform to the labour market and the welfare system will be the legacy of the Coalition Government:
[W]e are recreating the work ethic for everybody in Britain. I think that these reforms will be seen in the 2020's as being as important to this country as the trade Union reforms and privatisations were of the 1980s. This is as fundamental as that. This is the purpose of the Coalition Government.Will renewed growth result from radical employment law reforms?
The Coalition Government argues that a general reduction in 'red tape' is essential to promote growth. This narrative was particularly strongly argued with relation to the Beecroft report.
So does this mean that if the proposed radical reforms to employment law were enacted, strong economic growth would be inevitable?
Even if relatively few workers are adversely affected by the reforms, there is a danger that they will create an impression that employment in general is being made more insecure. This would not be helpful in the current climate with the clear link between job insecurity and the confidence to consume. [...] Overall, the conclusion has to be that making it easier to dismiss will have no significant impact on job generation and is irrelevant to the wider question of how to stimulate growth.The CIPD last week rejected the view that a "deregulation drive" is the key to renewed growth (see Update 17 to my post on Beecroft for further details). The CIPD said:
We do not believe that a 'deregulation drive' will lead to employers creating more jobs, thus stimulating economic growth. The UK is already the third least-regulated labour market in the OECD. It is important to maintain that labour market flexibility to ensure we remain competitive on the global stage, but this does not amount to the need for a wholesale stripping of employment rights and protections. We believe that employment regulation should be a last resort and applied in as light-touch a way as possible, in order to meet its stated aims at minimum administrative cost.UPDATE 1 (Friday 15 May 2012): Osborne hails 'more pro-business employment law'
Chancellor George Osborne says that creating "more pro-business employment law" represents a key plank of the Coalition Government's strategy to boost recovery.
In his Mansion House speech last night (Thursday 14 June 2012), Osborne cited "more pro-business employment law" as on way in which "We have [...] made our whole economy a place that better supports businesses, wealth creation and new jobs."
What do you think?
What do you make of the Telegraph's argument that the Coalition Government could be waging a "war on how we work?" And do you think that a "deregulation drive" could be the key to economic recovery?
Please share your reactions and views via the comments box below, or get in touch via Twitter, LinkedIn or Google+. I'd love to hear from you.
- Austerity & tough labour market reforms have 'devastating' economic consequences, says ILO In this post, we explore the question of whether such reforms can boost growth in greater detail, with a special focus on research from the International Labour Organization (ILO).
- The image used on this page is a detail from an image sourced via Wikimedia Commons.
- Beecroft report was inspired by 'hopeless' HR director, says Telegraph Read XpertHR's in-depth coverage of the Beecroft report and its repercussions.
- XpertHR economic commentary June 2012: The austerity trap XpertHR's June 2012 economic commentary examines the theory that austerity measures could be endangering recovery in the UK and other European economies. It also includes latest data relating to pay awards, inflation and unemployment, and consider how UK HR departments are coping with the ongoing challenges of the harsh economic climate.
- Government to unveil 'settlement agreements' for dismissals Personnel Today's John Eccleston reports.