Posted: Wednesday 23 May 2012
Beecroft Report - Abolition of Unfair Dismissal?
I mentioned earlier this week that venture capitalist Adrian Beecroft’s report on employment law was likely to be released this week: now, following a draft version of the report being leaked and the subsequent media speculation, the report was officially released yesterday evening, several days earlier than initially planned.
The report discusses a wide range of employment law matters and makes many recommendations, but by far the most discussed of these are the proposed changes to the law on dismissal and, in particular, the possibility of compensated no fault dismissals.
The report proposes four possible approaches for dealing with dismissals:-
- Remove the right to claim unfair dismissal in all cases apart from discrimination cases and cases where workers are protected because of EU derived rights such as the Working Time Directive and TUPE.
- Extend the qualification period for unfair dismissal beyond the two year limit.
- Streamline the process for dismissing for underperformance and reduce the burden of proof on the employer.
- Introduce a system of Compensated No Fault Dismissal.
The report acknowledges that getting rid of unfair dismissal altogether may be felt to be “politically unacceptable”, and it therefore strongly pushes for introducing the fourth option, Compensated No Fault Dismissal.
If Compensated No Fault Dismissal were to be introduced, in terms of the proposals, employers would be able to dismiss any employee without giving a reason provided they then paid them a leaving payment. Under the proposals, to dismiss an employee an employer would:
- State that he is not happy with the employee's performance.
- Consult with the employee to attempt to find a solution that would suit both parties. The employer would be under no obligation to accept any proposed solution.
- If no solution is agreed, give notice to the employee.
- Pay a defined level of compensation linked to the employee's salary and length of employment - the report proposes that this should be the same as that which would be paid as a statutory redundancy payment, unless a higher rate has been contractually agreed.
The Government are of course under no obligation to act upon Mr Beecroft’s recommendations but, prior to the report being officially published, they did issue a Call for Evidence (which closes on 8 June) on the possibility of introducing a system of no-fault dismissals for micro-businesses with fewer than 10 employees (you can read my blog on the Call for Evidence here).
Mr. Beecroft’s report goes much further than this, suggesting that no-fault dismissal should be open to all employers of any size.
I think though that it is fairly safe to assume, given that the Government will have had sight of the Report prior to issuing their Call for Evidence, that they have already rejected the possibility of introducing this for all employees.
I do though think, if the Government can get the Liberal Democrats on board, that it is possible that it will be introduced in some shape or form for employers who employ fewer than 10 employees.
You can read the full version of Mr Beecroft’s report here: what do you think of his recommendations?
