Employment lawyers have been struggling to keep up with policy developments lately. Three weeks ago I wrote here about a government decision to increase the qualifying period for unfair dismissal claims from one year to two.
Two weeks ago Sue Ashtiany wrote about government plans to require claimants pay fees to bring a claim in the employment tribunal
And now we learn from the Telegraph that Downing Street has commissioned a report from major Conservative party donor Adrian Beecroft who recommends doing away with the right to claim unfair dismissal altogether. Story and link to leaked parts of Beecroft report here.
Beecroft contends that present laws make it too difficult to dismiss people who under perform and that some employees take advantage of this by “coasting”. Hence the headline on the Telegraph piece: “Give firms freedom to sack unproductive workers” and also the BBC headline: “Scrap unfair dismissal claims for lazy workers – report.”
So people who are not lazy or unproductive don’t need to worry? No, actually the proposal is to remove the right to claim unfair dismissal from all employees.
Beecroft proposes replacing the current law with a no-fault compensation scheme. At present if you successfully claim unfair dismissal you get both a basic award (the same as a statutory redundancy payment) and a compensatory award based on your actual losses, subject to the duty to mitigate, and capped at £68,400. The proposal is to replace the basic award with an entitlement to a dismissal payment for which there would no need to establish unfairness, and to ditch the compensatory award altogether.
The concept of “fairness” would simply no longer be relevant.
As the redundancy payment is generally only a few thousand pounds (the maximum possible is £12,000 but that would be rare) you don’t need a degree in in maths to work out that this would be great for employers and terrible for employees.
This is radical thinking indeed. 29 million employees would lose the most basic employment protection, to save business from having to defend 48,000 unfair dismissal claims a year (2010-2011 figures), i.e. 1.5 claims per 1,000 in the workforce.
Beecroft notes that “The downside of the proposal is that some people would be dismissed simply because their employer did not like them”. His take on that: “While this is sad I believe it is a price worth paying for all the benefits that would result from the change.”
What are these benefits that will make it all worthwhile? “In the long run it will increase employment by making our businesses more competitive and hence more likely to grow.” And the evidence for that proposition? We don’t know, because the government refuses to disclose the full report.
Space precludes a more detailed analysis of the Beecroft proposals, but I do recommend the following blogs:
For a health check on Beecroft’s assertions (so far as possible), this by Channel 4 Fact Check.
For a management perspective “Abolishing unfair dismissal will achieve nothing” by Flip Chart Fairy Tales.
And for an employment law perspective, “Why compensated no-fault dismissals could cost employers dearly” by Anna Birtwhistle for ExpertHR: She points out that the unintended consequence would be an increase in discrimination claims with claimants driven to look for a discrimination angle in order to still have a claim.
Will it happen? Vince Cable has vetoed the proposal, and shadow Business Secretary Chuka Umunna described the proposals as “extraordinary”, so not for now, anyway. But a cynical view is that the government knew that all along, and the true purpose of the leaked report was to make the other proposals I mentioned at the outset seem “reasonable” by comparison.
Anya Palmer is an employment and discrimination barrister at Old Square Chambers: @AnyaPalmer