News

June 08, 2012

CIPD brands Beecroft proposals for compensated no-fault dismissals "objectionable and unnecessary"

As the opportunity for responding to the Government’s consultation on no-fault dismissals ends, the Chartered Institute for Personal and Development (CIPD) has appealed to ministers to recognise that “watering down employment regulation is not only damaging for employee relations, but will also fail to achieve the intended result”.

Radical plans to overhaul employment rights have been outlined in the report written by Adrian Beecroft, Downing Street adviser and chairman of private equity firm Dawn Capital. The report calls for firms to be given greater flexibility over making redundancies, as well as a cap on high-value employment tribunal awards.

Mike Emmott, CIPD employee relations adviser, said: “Employers don’t spend all their time worrying about unfair dismissal claims. In fact, according to the Government’s own research, unfair dismissal doesn’t even figure in the list of top ten regulations discouraging them from recruiting staff.

“Adrian Beecroft’s proposal for a system of compensated no-fault dismissal is objectionable and unnecessary. It is objectionable because it would be a licence for bad practice in managing people and damage the reputation of the whole micro-business sector. It is unnecessary because employers facing a possible tribunal claim can already offer the employee a compromise agreement and tailor the level of compensation to the particular circumstances.”

Emmott said it didn’t achieve the intended result in countries that have excluded small businesses from unfair dismissal regulations, including Germany, Australia and Spain. “There’s no evidence that no-fault dismissal would make a positive contribution to economic growth in the UK by encouraging the smallest firms to recruit more employees. Indeed, by increasing job insecurity and reducing employee engagement, it would be more likely to damage growth,” he warned.

Key proposals within the Beecroft report have split MPs – even those within the cabinet. In May, Prime Minister David Cameron said: “On the issue of no-fault dismissal and other proposals like that, I am interested in anything that makes it easier for one person to say to another person, ‘come and work for me’. We should look at all the things we can do to make it easier to employ people, to make it easier for businesses to grow, to make it easier for people to start businesses.”

Business Secretary Vince Cable was less supportive of the Beecroft proposals, reportedly saying that it is not the job of government to “scare the wits” out of people by scrapping their employment rights. 

• Download (PDF) the CIPD policy document – Dealing with dismissal and compensated no-fault dismissal for micro-businesses