Posted: Wednesday 18 April 2012
Following the raft of employment law changes that came into force on 6 April, the Government have now launched a Call for Evidence on dismissal processes, as they seek to find out whether the current dismissal rules are too complex and onerous on employers.
According to BIS’s statement, they are particularly interested in understanding how the Acas Code of Practice on Discipline and Grievance could be adapted to make it easier and more accessible to smaller businesses. I suspect the problem here isn’t the Code itself, which is in impressively plain English, but rather in raising general awareness of the need for small employers to read and be familiar with the code in the first place.
This Call for Evidence is the latest step in the Government’s wider attempt to reform employment law. Their stated aim is to encourage businesses to take on more employees by making dismissal processes quicker, simpler and easier to understand: in the press release announcing the Call for Evidence, Vince Cable says:
“We want to give businesses the confidence to hire new staff and make sure when a dismissal needs to be made, they aren’t tied up in red tape. This is an effort to see how extensive the problem is and shed some light on the desire for a change to the rules.”
What I found particularly interesting is that the Call for Evidence is also seeking views on the concept of a system of compensated “no-fault” dismissal for businesses with fewer than ten employees, whereby these micro-businesses would be able to dismiss workers who had done nothing of fault in exchange for a payment of a set sum of compensation.
The move towards a simpler, no-fault system for dismissal would no doubt be welcomed by micro-businesses, who often find it more difficult to access expert HR and legal advice, but it could come with significant pitfalls. The Call for Evidence states that under the no-fault system, employees would still be able to raise a claim if they believed they had been dismissed because they had been discriminated against or because of an automatically unfair reason, such as whistleblowing or for exercising certain statutory rights. Employers would still have to handle dismissals with caution to avoid claims in these categories from being raised.
There could also be business consequences, with smaller employers struggling to attract the best talent due to the lower levels of employee protection offered. One can also envisage issues arising with employers who employ say 10 employees. What if 1 of the employees leaves – will all of the other employees immediately lose their employment protection?
There is also the question of the levels of compensation that should be offered. If a compensated no-fault system is to be effective, it is vital that the sums offered are pitched correctly: too low, and employees are left with virtually no rights; too high, and the system becomes unattractive for employers, rendering it purposeless. The Government are seeking views on compensation levels as part of the Call.
The Call for Evidence closes on 8 June and I suspect we will hear a lot more on this topic in the coming months.