The Beecroft Report, commissioned by the Department for Business, Innovation and Skills proposes the introduction of “no-fault dismissals”, whereby small employers (with less than 10 staff) can dismiss employees at will without any explanation.
The rationale behind this is that small employers will hire staff and this will boost the economy, if they do not have to worry about the possibility of unfair dismissal claims. There is no evidence to support this theory. Indeed BIS research suggests that very few employers are put off hiring staff by employment law regulation.
The qualifying period for claiming unfair dismissal has recently increased. Now an employee who started work on or after the 6 April 2012 needs two years’ service before he or she can claim unfair dismissal. (Employees who started work before 6 April 2012 still need only one year’s service to claim unfair dismissal.) So during the first two years of employment, an employer can dismiss an employee for almost any reason (as long as it is not discriminatory) without explanation; and the employee has no legal remedy.
Surely two years is long enough for an employer to discover whether an employee is “up to scratch” or not?
Even after these two years an employer can fairly dismiss for a number of reasons including redundancy, performance and capability, as long as a fair procedure is followed.
The introduction of “no fault dismissals” is likely to increase the number of discrimination clams, which are more costly for an employer to defend. For example, if a 60-year-old is dismissed without explanation and is unable to claim unfair dismissal, he or she may claim age discrimination instead.
If an employee can be dismissed at will at any point in his or her employment, employees are likely to feel insecure and are less likely to spend. Could it be that the introduction of “no-fault dismissals” would reduce consumer confidence and deepen the recession?
What do you think? Please contact me if you would like advice on dismissals.