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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.