Government on the retreat over no-fault dismissals

Nick Clegg has now intervened in the intra-Coalition row over the proposed introduction of no-fault dismissals in the Government report which was released yesterday.

The Beecroft Report, of which substantive parts have been leaked over the past 6 to 12 months, suggests a number of employment law reforms relating to unfair dismissal, including that of the introduction of no-fault dismissals for businesses with 10 employees or fewer. Since the publication of the report yesterday there has been sustained criticism of the proposed reforms. Vince Cable, the Minister for Business, was reported to have privately remarked that the report was “bonkers”. There has also been significant criticism of the report in the traditional media and on social media sites such as Twitter.

The aim of the compensated no fault dismissal proposal is to “allow companies to rid themselves of unproductive workers without them claiming unfair dismissal”. Employees could, under the plans, be dismissed for no reason and instead of being compensated for the losses they have incurred they would be paid a statutory sum similar to a redundancy payment.

Currently, employees have protection from being unfairly dismissed under the Employment Rights Act 1996, whereby employers must make a decision that is within the range of reasonable responses in dismissing an employee and must carry out the dismissal in a procedurally fair manner. Beecroft has suggested relaxing these restrictions on the ability of businesses to fire employees. However, the current proposal is meeting with such opposition that the Government is believed to be either watering down the plans (so that compensated no fault dismissal would, for example, only apply to businesses with ten or fewer employees) or scrapping the idea altogether. Lets see what the coming weeks bring.