News & Views

‘Protected Conversations’ & other possible reforms

BY Gerry O'Hare
Employment law
BG Purple

The Deputy Prime Minister, Nick Clegg, has recently announced proposals designed to reduce bureaucracy in the workplace, including the notion of "protected conversations" which could not be referred to in any subsequent tribunals.  

It is envisaged that allowing employers to have frank conversations with unproductive employees about performance or retirement without worrying about the threat of legal action would help businesses make better decisions without the fear of such conversations being referred to at a later tribunal. 

A larger report on employment law produced by venture capitalist and Conservative donor, Adrian Beecroft, which was leaked to the Daily Telegraph, hints at further changes, calling for the abolition of unfair dismissal altogether and the introduction of "compensated, no-fault dismissals". 

According to the Telegraph, the report reads: "The rules both make it difficult to prove that someone deserves to be dismissed, and demands 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."  There is reference, in particular, to workers who ‘coast along’ and are unproductive being difficult to dismiss. 

The response to this has been mixed, with support from the British Chambers of Commerce, which said that the fear of tribunals was stopping employers from taking on staff and preventing businesses from growing.  However there was condemnation from many other quarters including the TUC and GMB.  John Philpott, chief economist at the Chartered Institute for Personnel and Development, said the changes would be counterproductive and would not address the real problems. 

Furthermore, the business secretary Vince Cable has responded to the proposals on unfair dismissal as being "unnecessary, based on no evidence and unlikely to improve labour market flexibility". 

Cable's aides said the proposals would do nothing to promote growth as 25 million consumers would face job insecurity and find it more difficult to get a mortgage, hitting government efforts to boost growth. 

Earlier this month the Government announced that the time a worker has to serve as an employee before being eligible to claim unfair dismissal will be doubled to two years from 6 April 2012. In addition, employees will have to pay a fee to take a case to an employment tribunal which they will only get back if they win. 

It may be that replacing unfair dismissals with ‘compensated no fault dismissals’ would have the unintended consequence of increasing HR claims as an alternative to unfair dismissal by employees seeking other grounds on which to make a claim.  This could result in employers paying more costs as HR claims are uncapped, more complex and if lost, could result in significant reputational damage to the business.

A larger report on employment law produced by venture capitalist and Conservative donor, Adrian Beecroft, which was leaked to the Daily Telegraph, hints at further changes, calling for the abolition of unfair dismissal altogether and the introduction of "compensated, no-fault dismissals".

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