A campaigning expert group of some 6,000 employment lawyers has warned of the harmful consequences of enabling micro businesses to dismiss at will.
The proposed no fault dismissals has sparked a clash between venture capitalist, Adrian Beecroft – author of the controversial Beecroft employment law review – and Business Secretary, Vince Cable, who has set a deadline of 8 June for responses to a Call for Evidence to assist Government in deciding what action to take.
The proposals came against the backcloth of Government’s drive to cut red tape regulation seen as stifling business growth.
The Employment Lawyers Association (ELA) – an apolitical body which campaigns for reform to make employment law clearer and more workable for employers and employees – has highlighted the critical issues arising from the proposed introduction of compensated no fault dismissal (CNFD) which, it says, must be addressed thoroughly before any change to regulations.
These include:
* The spawning of a raft of other types of claims if an unfair dismissal claim is not available.
* Significant satellite litigation.
* Micro businesses being shunned by potential employees.
* Natural business growth being inhibited.
While ELA sees plus points for micro businesses in being able to dismiss staff without risking unfair dismissal claims in return for the employee receiving an appropriate pre-defined sum in compensation, it is concerned about harmful consequences.
ELA members, employment lawyers James Davies and Howard Hymanson, who led the ELA group which examined the proposals and have submitted views ahead of Vince Cable’s 8 June deadline, point out that changes extending the qualifying period for unfair dismissal claims to two years for employees starting work after 6 April 2012 already give employers much greater opportunity to deal with underperforming staff.
“No fault dismissal may further reduce unfair dismissal claims but we could well see an increase in different types of claims from aggrieved employees, for example under discrimination or whistleblowing rules,” says ELA.
“Further dispute might also arise around the definition of a ‘micro business’ unless Government prescribes precisely when headcounts are made.”
The Government’s own research, which echoes the experience of ELA’s broad membership, shows that dismissal and disciplinary processes are not a major concern for business and do not act as a brake on companies taking on staff.
But ELA thinks there is a danger that companies with up to nine employees may deliberately limit their own growth and expansion so that they can retain the ability to carry out a CNFD.
ELA also believes the introduction of CNFD could make people think twice about working for a micro business, knowing that they would have less employment protection than with a larger employer and could be sacked at will.
Finally, ELA argues that the pre-defined compensation for a sacked employee needs to be set at such a level that it is affordable for business but not so low that it could be seen as a licence to ride roughshod over employees’ rights.
