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Employment Update: Spotlight on dismissal procedures

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United Kingdom

Employment Update: Spotlight on dismissal procedures

With a seemingly unrelenting appetite to reform employment law, the Government has now published another 'call for evidence' on whether current dismissal procedures are too onerous, too complex or misunderstood.  The call for evidence, which also includes the Government's proposals on 'compensated no fault dismissals', closes on 8 June 2012.

ACAS Code - Aussie rules ok?

The Government intends to establish a strong evidence base to understand the current dismissal system, including awareness, use and understanding of the Acas Code of Practice on Discipline and Grievance and, in particular, whether it should be adapted for smaller employers. Included in the call for evidence is the 'Australian Small Business Code'. The Government describes this as an alternative model which sets out similar principles to the Acas Code but seeks to provide greater certainty for small businesses in handling the dismissal stage of a disciplinary process. The Government is interested in views as to whether this model could be successfully applied in the UK.

Compensated no fault dismissals

Of particular interest is the Government's call for evidence on compensated no fault dismissals. This controversial proposal, originally leaked in the Telegraph last year, would apply only to micro-businesses with fewer than 10 employees. The Government states that the concept of compensated no fault dismissals would enable a business to dismiss an employee where no fault was identified on the part of the employee, provided that it paid a set amount of compensation to the employee. The employer would not be required to go through a formal dismissal procedure. It would still remain possible for employers to dismiss employees without having to pay the set amount of compensation if there is a fair reason for the dismissal and the employer acted reasonably in carrying it out.
 
Employees dismissed through compensated no fault dismissals would not be able to bring an employment tribunal claim for unfair dismissal. However, they could still bring other claims, including discrimination and whistleblowing claims. The Government states that more than half of unfair dismissal claims include a claim in some other jurisdiction so compensated no fault dismissals 'would not therefore give complete peace of mind to an employer'.

Employment Law Review Annual Update

The Government has also published the Employment Law Review Annual Update, listing the various employment law reforms that are already underway. The Employer’s Charter, first produced in January 2011, has also been refreshed to cover sickness absence and recruitment.

Now what?

Many employers, understandably, are concerned about the onslaught of changes to employment law and the concept of compensated no fault dismissals has been met with some scepticism. The CIPD has already stated that compensated no fault dismissals will create a perverse disincentive to growth, commenting that "there is no economic case to be made for the watering down of employment rights for businesses of any size. Businesses have far more to lose in lost productivity from a de-motivated and disengaged workforce than they stand to gain from the ability to hire and fire at will."
 
The Government has made it clear, in relation to many of the employment law proposals, that it is considering the impact of existing employment law regulation on small businesses. There is a risk, however, that this will skew the scope of reform and fail to strike the right balance between providing flexibility for the employer and protection for the employee. Although the Government's proposals may seem never ending, now is the time to have your say.

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