Earlier today, we reported on a leaked Government report which suggests that the right to claim unfair dismissal should be replaced by new "Compensated No Fault Dismissals" in order to boost economic growth.The report - which the Daily Telegraph claims was commissioned by David Cameron - was written by venture capitalist Adrian Beecroft, and is said to have the support of Downing Street, Chancellor George Osborne, and some business leaders.
Beecroft's report has already generated extensive and heated debate among professional bodies, employment lawyers, HR professionals and bloggers.
Click here for a summary of some of the initial reactions to the report.
Here, 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.
Anna Birtwistle is a solicitor at specialist employment and partnership law firm CM Murray LLP, based in Canary Wharf. Anna has a particular interest in discrimination and cross border employment law issues. You can follow Anna on Twitter.
Anna Birtwistle: Why Compensated No Fault Dismissals could cost employers dearly
Contrary to what the Beecroft report would seem to have people believe, unfair dismissal protections do not prevent businesses from sacking underperforming employees.
Rather, the current system requires that poor performance is actively addressed by management with the relevant employee and that an adequate opportunity be provided to the employee to improve, with the benefit of appropriate support, training and time, before considering dismissal for continued underperformance.
Obviously, if someone is wilfully and intentionally not doing their job, then that can be addressed as misconduct and dealt with under the disciplinary process.
Beecroft's proposal that the current unfair dismissal arrangements be replaced with an alternative system of "Compensated No Fault Dismissals" appears worrying for a number of reasons.
These include the following:
- Replacing unfair dismissals with "Compensated No Fault Dismissals" will do nothing to address the underlying reason for poor performance in organisations: bad management and unwillingness to address underperformance issues head-on with staff; and
- It will have the unintended consequence of increased discrimination
claims. We only need to look across the water to the US - where
employment 'at will' (which lawfully allows dismissal for no cause) is
the norm - to see that scrapping 'plain' unfair dismissal claims will
likely result in employees looking for other grounds (e.g.
discrimination) on which to sue.
- Directly in terms of people bringing more complex uncapped discrimination claims which carry a higher potential legal and reputational risk for the employer.
- Indirectly through the continued acceptance of inefficient management practices.
- Replace right to claim unfair dismissal with Compensated No Fault Dismissals, says leaked report commissioned by David Cameron
- Are unfair dismissal rules really holding employers back from creating new jobs in 2011? 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? Is Beecroft guilty of hiding behind what Barrister Anya Palmer terms the "employers told us" approach?
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