No Fault Dismissal

It may be a few days since the details of the Beecroft Report became available but it takes the writer a few days to digest and form an opinion.

I have of course had the benefit of commentary from the usual suspects. yet I have still find anybody whose analysis is the same as mine.

There are lots of recommendations in the report but the stand out one is " No Fault Dismissal "

Its worth reading the whole report but to summarise the most contentious point, an employer would be able to sack an employee giving no reason at any time. The employee would be entitled to compensation from the employer based on a statutory formula akin to redundancy.

The  logic for the recommendation is that sometimes employers get " stuck " with an employee that is no longer performing in their job and its an expensive and difficult process for the employer to do anything about it. Disproportionately expensive for small businesses.

The 2nd supporting arm of this recommendation is that if employers can dismiss at will they are more likely to hire and this will improve the economy. This is premise is supported by the Institute of Directors as reported here.

The government has now entered into a consultation phase and will then decide as to whether the recommendations have merit and should become law.

What a load of bollocks's.

There is a problem but not as described.

It is perfectly possible to dismiss an under performing employee. You have to follow best practice/contract terms. Generally,  you identify problems and required action to improve to the employee ( and if you have any sense, offer additional help/training ), then if no improvement a warning is issued, then a written warning, then a final warning and finally dismissal.

The process is stressful for everybody but does not have to be protracted.

The problem is what happens during or afterwards. The danger for the employer is that the employee will quit and claim constructive dismissal or afterwards claim unfair/wrongful dismissal. This will generally lead to a claim before an Employment Tribunal. This is what employers are scared of and employees know it.

Generally speaking ( and there are exceptions ) there are no awards for costs in the Employment Tribunal. So if a claim is made then regardless of its merits and outcome there is no risk to the loser of a financial penalty. This is fuelled by the availability of specialist employment lawyers who will act on ex employees behalf on a " No win , No fee " basis.

So in effect a dismissed employee has nothing to lose by bringing a claim in front of an Employment Tribunal. And that’s the problem.

It is cheaper for an employer to pay off a frivolous employment claim than employ a lawyer to defend it !

No fault dismissal is not required. What is required is the introduction of costs into the Employment Tribunal system. If employers are going to lose then then it is sensible for them to settle fairly and quickly. If an ex employee is going to lose then less claims will be made.

No ones statutory rights are affected.

As for the ideas that no fault dismissal will deregulate the labour market and deregulation will improve the number of people being employed, again, I say Bollocks !

A new employee does not get statutory employment rights until they have completed 2 years employment. Broadly speaking they can be dismissed at any point for no reason up to 2 years. If you are an employer and cannot workout whether an employee is any good within 2 years then frankly your in the wrong job !

However some of the recommendations in the report do make sense ie pensions and small business for instance.

My final comment re No fault Dismissal is that if your female or in a relationship, be scared ! I quote :-

" However the current list of reasons why an employee can claim unfair dismissal regardless of how long they have been employed (which are basically not related to the employee’s ability to do the job but rather a list of unacceptable reasons, largely related to union activity, why an employer might unreasonably wish to dismiss an otherwise well-performing employee) would remain in place. So too would the right of the employer to follow the current unfair dismissal process, which would often have a lower cost.

The concept of no fault dismissal specifically applies to ANYONE. Read the report !

So if your pregnant you can be dismissed. You protection against this is limited to the paragraph above. The report is totally silent on what the position of pregnant employees if a no fault dismissal law was available to employers.

Scary or what ? Remember the government is considering whether to implement this !