No Fault Dismissal Action - Impact On Businesses?

Peninsula Team

June 29 2012

It has been recently reported that the Government will not implement the controversial no fault dismissal proposals that had been outlined in the Beecroft Report. The employment law reform report submitted by venture capitalist Adrian Beecroft to the Conservative Government stated that in order to enhance UK economic growth, micro businesses with ten employees or less should be able to dismiss employees without the threat of being taken to an employment tribunal. All they would have to do was give the employee an amount of money, likely to be an amount equal to what their statutory redundancy payment would have been.

The proposals had been met by widespread criticism through the media from a number of parties. Liberal Democrats Nick Clegg publically condemned the idea of no fault dismissal for workers and several Trade Unions attacked the proposal claiming that they stripped worker’s rights to a bare minimum. Other parties also voiced their disapproval of the no fault dismissal plans, such as the CIPD and even certain employer’s associations including the EFF, stated the move to introduce no fault dismissals would not lead to employers to willingly hire more workers and lead to tensions in employment relations. However, there had been notable support from members of the conservative party and employer and their associations.

Business Secretary Vince Cable subsequently issued a six month Call for Evidence to assess the feasibility of implementing the no fault dismissal proposal earlier in the year. However, five days after the Call for Evidence finished, amid the prolonged storms surrounding the proposal and extensive pressure from parties to prevent no fault dismissals in the workplace, it was reported that the Government has decided not to pursue the proposal.

Nevertheless, the Government is continuing to look for ways to make it easier for employers to dismiss employees in the workplace and reduce the number of tribunals currently faced in the UK, potentially through the wider use of settlement agreements.

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