The justification for this proposal would be to allow employers a risk free method of weeding out under-performing staff and being able to dismiss employees that they saw as "coasting", secure in the knowledge that they are protected by statute from unfair dismissal.
The author of the report, Adrian Beecroft, has apparently recommended this change to the law on the basis of the combined benefits of economic growth and reduction in red tape, notwithstanding that this would remove rights which have been enshrined in UK law for a generation of employees. He believes that this would make businesses more competitive and therefore more likely to grow.
According to press reporting, the report apparently refers to "the terrible impact of the current unfair dismissal rules on the efficiency and hence competitiveness of our businesses" and the resulting "effectiveness and cost of our public services".
Acknowledging that this would be a Draconian change, Beecroft suggests the introduction of a "Compensated No Fault Dismissal", under which employees would be entitled to a basic redundancy payment and notice. Although this runs contrary to the spirit of employment rights enshrined in the UK, the principle of such an arrangement is not markedly dissimilar to provisions elsewhere in Europe. However, there is a crucial difference in that the calculation of redundancy payments in Europe is not generally limited by a capped amount of weekly pay, in addition to which the payment schemes are in any event more generous in the calculation of entitlements.
Whilst Beecroft's belief that employers should be given more scope to improve the efficiency of their workforce by relaxing the existing restrictions on dismissing employees may well be music to the ears of many employers, this would undoubtedly be extremely contentious to implement. It is inconceivable that it would be acceptable to the unions, and whilst that in itself may not be sufficient to sink any such proposal, such a wholesale abolition of an enshrined right is unlikely to secure widespread support throughout the Coalition. It must be questioned, therefore, whether it would have any real prospect of being implemented.
Richie Alder, partner at law firm Trowers & Hamlins
