On the evening of 6 March, George Osborne announced a call for evidence (not a full consultation) on “compensated no-fault dismissals” for small businesses.
Anya Palmer usefully collated some reaction – including from Anna Birtwhistle (CM Murray LLP) and Flip Chart Fairytales (both of whom I agree with) to the original Beercroft proposals in The Lawyer, but I thought I’d add some comments.
I’m going to focus on Osborne’s comment: “But what about your right to start a business and not be sued out of existence?”.
Unless I’m missing something, no employer has a right not to face tribunal claims from aggrieved employees who feel that they have been treated unlawfully. When it comes to unfair dismissal, employers have only to act reasonably in the circumstances to dismiss an employee fairly. I don’t think that most people would argue that that’s too much to ask. I appreciate that small employers, perhaps without dedicated HR functions, might be panicked about employment law generally and unfair dismissal in particular. But there’s help available: ACAS produces a wealth of guidance on dismissing employees, and if you follow that (and – sorry, shameless plug – subscribe to XpertHR!) then you won’t go far wrong.
Of course, employers (small or otherwise) can be put to great expense and hassle by vexatious claimants, or where the employee simply doesn’t have a very good case. The former situation will no doubt be helped by (as Osborne noted) the Government’s decision to introduce fees for bringing a tribunal claim, and the latter by the standard tribunal procedure, which allows claims to be thrown out where they have little or no prospect of success. If claims have a reasonable prospect of success, then there’s no reason why the employee shouldn’t be able to bring the claim.
So, bearing all that in mind – particularly that reasonable employers can dismiss employees already with little or no risk of being “sued out of existence” – who is Osborne trying to protect? Unreasonable employers? Osborne’s statement almost implies that employers can be sued out of existence regardless of how they treat their employees.
I agree that these proposals will probably save employers time and expense when dismissing employees, but I doubt that they will increase employment, and they strike at the heart of the most basic protection for employees, protection that is there for a reason.
The other point is the call for evidence. As Darren Newman commented earlier on twitter, exactly what evidence will this produce? I am entirely sure that small businesses and various organisations, such as the CBI, will be in favour of the proposals – and, looking at it from their perspective, that’s completely understandable. But will that evidence actually tell us anything other than that those stakeholders agree with it?
Osborne suggests that people submit evidence if they think the proposal will increase employment. Do employers really hold off on employing people they need for their businesses just because of the potential consequences if they don’t act reasonably in dismissing them? I find that a very strange notion indeed.
Employers genuinely don’t need to worry about unfair dismissal, provided they act fairly. Discrimination law is a much more complicated area, and there will certainly be no exemptions for small employers from those claims, which may well increase if Osborne’s proposals are implemented.
For more information from XpertHR on this issue, see:
- Government announces call for evidence on “compensated no-fault dismissals The Chancellor George Osborne has announced a call for evidence on “compensated no-fault dismissals” for small businesses. The Government has yet to set out the details of its proposals, but it is expected that they would allow employers with 10 or fewer employees to dismiss an employee with notice pay without him or her being able to bring an unfair dismissal claim.
- Osborne launches call for evidence on no-fault dismissals Personnel Today reports on George Osborne’s proposals
- Podcast: “Radical” employment law reform; and employee engagement On this XpertHR Weekly podcast, employment law expert and consultant editor Darren Newman shares his thoughts on various proposals, including no-fault dismissals for micro-firms.
- Compensated no-fault dismissals: Osborne calls for evidence Michael Carty gathers reaction to George Osborne’s speech on the XpertHR Employment Intelligence blog.