A remarkable kite-flying exercise emerged today with widespread news coverage of the report about employment law produced by venture capitalist Adrian Beecroft at the request of David Cameron. With headlines such as “Scrap unfair dismissal claims for lazy workers – report” (BBC) and “Give firms freedom to sack unproductive workers, leaked Downing Street report advises” (Telegraph), the report suggests employers could dismiss employees without giving a reason, by using a “Compulsory No Fault Dismissal System”. According to the report, “the employee should be given a chance to argue his or her case, and to suggest (but not demand) that they be given time to improve or be transferred to a less demanding job at a lower wage. If no agreement could be reached, the employee would receive the same payment they would get if they had been made redundant”. So employers would become unaccountable (save for the equivalent of a redundancy payment) even if the action taken was blatantly unfair and unjustified. Incidentally, if that option is available, why would any employers follow the requirements for a full redundancy process if they can be safely circumvented? The report refers to Britain’s “terrible” employment laws and suggests that they are undermining economic growth. The report is fundamentally wrong on two counts.
First, current employment law allows employers fairly to dismiss lazy and unproductive workers. However, there are safeguards in place. Not unreasonably employers are expected, if called upon to do so, to justify assertions that employees are, for example, lazy and/or unproductive. Capability and conduct are potentially fair reasons for dismissal as the law stands. In most cases, as long as the employer has followed fairly straightforward procedures, unjustified claims for unfair dismissal can be successfully resisted. What irks many employers is that there is an increasing trend for such claims to be accompanied by claims of discrimination. These claims are much more difficult to deal with and there is no suggestion that discrimination legislation should be watered down (no doubt because the European Court would have something to say about that). So, without the option of unfair dismissal, there would undoubtedly be a surge of discrimination claims which are far more expensive and time consuming for employers to deal with.
Second, there is no evidence produced to support the assertion that unfair dismissal claims are stifling economic growth. In fact, and contrary to common perceptions, the OECD’s Employment Protection Index shows that nearly every developed country has more employment protection than the UK.
Evidently the report does not command coalition support with a senior Liberal Democrat spokesman describing it as “madness”. Labour MP Michael Meacher was on the case last week, commenting that “for Beecroft, labour is a mere commodity of production whose cost should be pared down to the irreducible minimum, and if the associated impedimenta of workplace rights can be stripped out, so much the better”.
In a busy day for employment law, Deputy Prime Minister Nick Clegg has suggested that as part of the government’s campaign against red tape, employers will be able to hold “protected conversations” with employees about issues such as performance and retirement. The idea is to encourage frank and open discussions on the basis that such discussions could not be used in tribunals. Mr Clegg has said that this will form part of a major package of employment law reform to be announced this autumn (so presumably very soon!).
Many employers will welcome the idea of being able to hold such discussions since there is an undoubted fear of “saying the wrong thing” which can, in itself, result in tribunal claims. Unlike the report produced by Mr Beecroft, this appears to be a constructive contribution to employment law reform.