· 2 min read · Features

Hire? Fire? Compensated no-fault dismissals: The answer is to tackle performance management


Last year the BIS asked Adrian Beecroft to report on a number of aspects considering ways to simplify employment matters for small businesses.

One of the most controversial recommendations set out in the ensuing Beecroft Report was the compensated no fault dismissal.

The intention is to give small businesses (i.e. those with fewer than 10 employees) the confidence to take on new staff, or find a way to remove poor performers, without the risk of a costly unfair dismissal claim and having to spend hours dealing with protracted capability processes. The compensated no fault dismissal would mean that employers could dismiss a worker, where no fault had been identified on the part of the employee, by paying of a set amount of compensation.

The Government proposes that micro-businesses should be able to use this devicewhere no fault has been identified on the part of the worker. It seems likely that this is envisaged for use in poor performance cases, which makes up the vast majority of employer complaints.

In these cases, the employee in turn would not be able to bring a claim of ordinary unfair dismissal, although it would still be open to him, to bring claims of discrimination or automatic unfair dismissal against the employer.

When the proposal was leaked last autumn it caused a storm of fury from the unions; no surprises there; the response was predictably Pavlovian and didn't bother to address itself to the facts. If the Government wanted to extend statutory holiday by another three days, some of the current union leaders are so wrong-headed and idiotic that they would be likely to challenge it as "disgusting" and "oppressive" for some reason or other. (I do like a balanced assessment of facts, so dislike emotional partisan ranting from employers or employees.)

BIS has researched and published a report which considers similar legislation vis a vis employment levels and dismissal claims in other countries. It seems to suggest that the use of such a process will have little or no impact on employers' willingness to employ.`

The Government's usual information gathering exercise has started. Presumably if the responses do not provide the feedback it wants it will ignore this as it has ignored employer concerns on a number of important issues previously (removal of the default retirement age, agency workers etc). You can give feedback via the BIS website.

In themeantime, get the right people in and you won't have a problem. Deal with misconduct and poor performance issues sooner rather than later in a correct manner and problems fade away. So for problem-free hiring, firing and everything in between, get in touch.

Kate Russell, MD, Russell HR Consulting