Will no-fault dismissals help or hinder businesses?

The introduction of the no-fault dismissal procedure in the Beecroft Report is meant to reduce the burden of compliance and encourage growth in small businesses – but could it actually have the opposite effect?

The no-fault proposals are intended to lessen the pressure on small businesses without HR staff by helping them to manage the increases in employment rules and legislation. The no-fault dismissal procedure will allow employers to dismiss an employee in circumstances that fall outside of the current permitted fair reasons.

In principle, this appears to be a sensible proposal. However, Business Secretary Vince Cable has expressed strong reservations and had attempted to block publication of the Report on Employment Law. It’s becoming apparent that the creation of a two-tier system of employment legislation is a highly undesirable method of achieving growth – and could hinder businesses rather than help them.

Any impact on small firms’ ability to attract top level candidates would affect their ability to compete at all levels – and this ultimately affects their potential for growth. There is a real risk that employees will prefer to work for larger established organisations that provide them with potentially greater job security, and by virtue of the proposed changes, are also able to afford them greater protection from unfair dismissal. These factors put larger organisations at a clear advantage when it comes to the recruitment of top-level candidates.

Changes are required to reduce the burden that is placed on all businesses to comply with employment rules and legislation. Deborah Francis, Head of Employment at Lawspeed thinks that steps need to be taken to address concerns around abuse and stigma, and to avoid creating an unfair two-tier employment system. She says “Either this should be made available to all organisations irrespective of size and resources, or it should be reworked.”

Managing poor performance, and how to deal wtih dismissal procedures are both on the agenda in Lawspeed’s upcoming Seminar, Knowledge is Power on 26 June. Now booking on 01273 236236.

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