Scrap unfair dismissal, says Downing Street report

Leaked report argues that move will boost employment -- a disingenuous claim given non-existent econ

Workers should lose the right to claim unfair dismissal if they are sacked without explanation, according to a leaked government report. The argument is that this would allow businesses to replace unproductive workers with more capable candidates, thus boosting economic growth.

The controversial proposals are made in a report from venture capitalist Adrian Beecroft, commissioned by David Cameron. It claims that current laws allow workers to "coast along", leaving employers fearful of expansion because new employees are impossible to sack.

Dated 12 October 2011, the report, leaked to the Daily Telegraph, says that the first major issue for British enterprise is "the terrible impact of the current unfair dismissal rules on the efficiency and hence competitiveness of our businesses, and on the effectiveness and cost of our public services." It continues:

The rules both make it difficult to prove that someone deserves to be dismissed, and demand a process for doing so which is so lengthy and complex that it is hard to implement. This makes it too easy for employees to claim they have been unfairly treated and to gain significant compensation.

It is hardly surprising that the report is said to have the support of both Downing Street and the Chancellor, as it is merely a step further in the direction they have already taken. At the Conservative Party conference earlier this month, George Osborne announced measures to make it easier for bosses to sack workers. These included increasing the qualifying period for unfair dismissals from one year of employment to two, and requiring those who take their employer to industrial tribunals to pay an initial deposit of £250, and a further £1,000 is a hearing is granted.

His justification was the same as Beecroft's: that this will encourage companies to take workers on. But it is more than a little perverse to argue that making it easier to sack people will reduce unemployment.

Even Beecroft accepts that there are risks to his strategy. Writing that it would be "politically unacceptable" to simply scrap unfair dismissal, he proposes that employers be allowed to sack unproductive staff with notice and a basic redundancy package. However, he says that a "downside" to this is that employers could fire staff because they "did not like them". He adds:

While this is sad I believe it is a price worth paying for all the benefits that would result from the change.

It is more than "sad" for workers to face a higher risk of losing their jobs in this unstable economic climate. If the current system is open to abuse by employees, as claimed, this would merely tip the balance way towards the employer. There are other ways of reforming the system without eroding workers' rights to such an alarming degree (some are outlined in this Liberal Conspiracy blog).

Such a change might make things easier for business, but would be an alarming assault on employee rights. Moreover, it is disingenuous to claim that it would have a significant impact on growth. This analysis places too much weight upon the role of workers' rights in rising unemployment (which is spurious, to say the least), and not enough on non-existent economic growth and government cuts.

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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How tribunal fees silenced low-paid workers: “it was more than I earned in a month”

The government was forced to scrap them after losing a Supreme Court case.

How much of a barrier were employment tribunal fees to low-paid workers? Ask Elaine Janes. “Bringing up six children, I didn’t have £20 spare. Every penny was spent on my children – £250 to me would have been a lot of money. My priorities would have been keeping a roof over my head.”

That fee – £250 – is what the government has been charging a woman who wants to challenge their employer, as Janes did, to pay them the same as men of a similar skills category. As for the £950 to pay for the actual hearing? “That’s probably more than I earned a month.”

Janes did go to a tribunal, but only because she was supported by Unison, her trade union. She has won her claim, although the final compensation is still being worked out. But it’s not just about the money. “It’s about justice, really,” she says. “I think everybody should be paid equally. I don’t see why a man who is doing the equivalent job to what I was doing should earn two to three times more than I was.” She believes that by setting a fee of £950, the government “wouldn’t have even begun to understand” how much it disempowered low-paid workers.

She has a point. The Taylor Review on working practices noted the sharp decline in tribunal cases after fees were introduced in 2013, and that the claimant could pay £1,200 upfront in fees, only to have their case dismissed on a technical point of their employment status. “We believe that this is unfair,” the report said. It added: "There can be no doubt that the introduction of fees has resulted in a significant reduction in the number of cases brought."

Now, the government has been forced to concede. On Wednesday, the Supreme Court ruled in favour of Unison’s argument that the government acted unlawfully in introducing the fees. The judges said fees were set so high, they had “a deterrent effect upon discrimination claims” and put off more genuine cases than the flimsy claims the government was trying to deter.

Shortly after the judgement, the Ministry of Justice said it would stop charging employment tribunal fees immediately and refund those who had paid. This bill could amount to £27m, according to Unison estimates. 

As for Janes, she hopes low-paid workers will feel more confident to challenge unfair work practices. “For people in the future it is good news,” she says. “It gives everybody the chance to make that claim.” 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.