"Firms should be given right to sack people without explanation" - No. 10

Discussion in 'Economics' started by Pyianno, Oct 26, 2011.

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  1. Give firms freedom to sack unproductive workers, leaked Downing Street report advises - Telegraph

    Britain’s “terrible” employment laws are undermining economic growth and should be overhauled, according to the confidential report obtained by The Daily Telegraph (Published below).

    It says that British workers should be banned from claiming unfair dismissal so that firms and public sector bodies can find more capable replacements.

    Under current regulations, workers are allowed to “coast along” and employers are left fearful of expanding because new staff may prove “unknown quantities” who are impossible to sack, the report says.

    The radical recommendation to scrap the concept of unfair dismissal is made by Adrian Beecroft, a venture capitalist, in a report commissioned by David Cameron.

    The report is understood to have the support of both the Chancellor and Downing St, although the proposals are likely to meet with strong opposition from some Liberal Democrats and trade unions.

    While Downing Street is aware that the proposal will be controversial, it is equally concerned that the scale of the economic crisis is such that dramatic measures are required to promote growth.

    A final draft of the Beecroft report, dated Oct 12 2011, says 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.”

    The report 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.”

    Mr Beecroft in particular highlights abuses of the law in the public sector, where managers have been forced to offer under-performing staff large settlements because they fear costly tribunal rulings. The report says that the unfair dismissal rules have made public bodies “reluctant to dismiss unsatisfactory employees”. “[They] therefore accept inefficiency that they would not tolerate if dismissal of unsatisfactory employees was easier.”

    It goes on: “A proportion of employees, secure in the knowledge that their employer will be reluctant to dismiss them, work at a level well below their true capacity; they coast along.”

    The recommendation is particularly aimed at helping lift the burden of red tape from small and medium-sized businesses, which lack the human resources departments and expertise to deal with complex tribunals.

    The report concludes that there is nothing in European law that would prevent the Government from abandoning unfair dismissal laws – although regulations preventing dismissal on the basis of a person’s gender, race or sexuality would remain.

    However, Mr Beecroft warns that simply scrapping the law would be “politically unacceptable”.

    He therefore recommends a replacement regulation, called Compensated No Fault Dismissal, which would allow employers to sack unproductive staff with basic redundancy pay and notice. Mr Beecroft concedes that a “downside” under his new scheme is that employers could fire staff because they “did not like them”.

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

    The confidential report has been circulated across Whitehall this week and its findings are understood to have been discussed with business leaders, who are said to support the key recommendation.

    Downing Street was not planning to release the analysis but is now expected to publish the report later this year, partly to counter inaccurate reports that suggested the report advocated cutting maternity rights.

    Mr Beecroft insists that making it easier for firms to sack under-performing staff will boost employment, rather than increase unemployment.

    He says: “In the long run it will increase employment by making our businesses more competitive and hence more likely to grow.”
  2. My four pence.

    This idea would largely be impossible to implement. You would have to, in no particular order:

    1) Repeal whistleblowing laws (PIDA 1998 ) - NOT going to happen.

    2) Withdraw from the EU and thus: secure absolute exemption to the European Working Time Directive (biggest number of ET claims are for breaches of this); prevent it being an offence to sack somebody for attempting to assert a statutory right under this (or any other statutory) provision; withdraw from ECHR and right to association (and thus Trade Union membership).

    3) Repeal TU(LR)CA 1992 (i.e. repeal the laws preventing employers from sacking people for trying to join a Trade Union).

    4) Repeal the National Minimum Wage Act.

    It goes on and on.

    These are the daft ideas Government formulates when it's composed exclusively of millionnaires with no experience of the real world.

    Also - Trade Unions much more likely to resort to strike action if they have no other legitimate method of defending their members from mistreatment.
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  3. A proposal that is staggering in it's stupidity. I can hardly think of any one thing more guaranteed to bring mass industrial action.

    Bollocks. Any half-competent manager can get a bad employee out the door by using the disciplinary procedure. Ending unfair dismissal gives a free hand to crap managers.
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    FORMER_FYRDMAN LE Book Reviewer

    Erm - current situation has to be changed because large chunks of the public sector particularly are tearing the arse out of it, government report suggests something draconian which will allow bosses to turn employees into soap and sell their children into slavery, actual reform occurs somewhere approximately midway between those two points with everyone claiming to have won. Caravan moves on.
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  5. You missed a bit - reforms incredibly badly drafted and a public-sector union hires lawyers to drive a coach and horses through them in Brussels.
    • Like Like x 1

    FORMER_FYRDMAN LE Book Reviewer

    Fair point.
  7. Spot on. The problem is poor management not gripping the situation.

    A non story. What are they trying to hide instead?
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  8. So. Can you see why there might be a couple of problems here as far as the public sector is concerned?
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  9. My bold.

    A venture capitalist gambles investors money.

    These are the type of people who got us into the financial crisis.

    The people they want to make easy to sack arn't
    • Like Like x 2

  10. And most managers are acutely aware that 90% of slackers they shove out the door will take them to a tribunal 'on spec'. Most employers insurers now tell them to settle out of court on any case where the employee is seeking less than £10K as it's finically unviable to contest cases that small.
    We had an employee at my last place who had done it at least one probbaly two previous employers and tried it on with again with the current one. It only came to light when a casual conversation with an acquaintance of hers brought to light that her 'sabbatical in Australia' on her CV, (there was another 'sabbatical', Crete, on her CV after leaving another previous employer), was courtesy of a large cheque from her previous employers who settled rather than face a sexual harassment claim after he fired her for poor attendance.
    Despite being banged to rights, 'I'm at home sick', (she was seen boarding a train complete with rucksack and hiking boots by another worker all week), when sacked, counterclaimed she was being 'harrassed' at work and her solicitors filed for a settlement. My boss decided to fight against best advice of the legal eagles and the former employee blinked.
    We learned she's been fired by her next employer, pretty safe bet as she's a serial litigant she's going to claim against them too I'd say.
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  11. Two questions from me:

    1. If poor performing workers can be sacked without explanation, how are they going to know what behaviour caused them to get the sack? Isn't it a fundamental principle of British Laws that a person can only be accused under law in an open forum?

    2. Are those under-perfoming employees to include those inside of the boardroom, whose performance never seems to get in the way of remuneration? Or is this measure only for people the PM didn't go to school with?
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  12. Well, there would certainly be a massive reduction in compensated redundancies, and a vast rise in summary dismissals without notice.

    Just to benefit the economy, natch, not to save money on proper redundancy packages. The MOD would take to that like ducks to water, I imagine.
  13. The only people who anything to fear are people not doing a good job.
    Despite the febrile fantasies of many, employers don't like getting rid of good staff but all to often when they do need to shed staff, its currently often less painful to shed the good ones rather than the PITA's who will fight you every inch of the way.

    I've worked for a number of American firms in the past who had 'at will' employment contracts and they didn't go on random sacking orgies and the contracts had clauses agreeing not to sack you except for failing to meet satisfactory performance or disciplinary standards, both of which were clearly laid down in the contracts.
  14. I'm somewhat torn by this question. On the one hand, the missis works for a large city firm and I wouldn't want her to feel insecure about her career every time she loses a client, has a bad day, or calls in sick.

    On the other hand, I run a growing business and this is a very real problem. Unless you go through an agency, it is very easy to get stuck with employees who simply aren't able/willing to pull their weight. There's an attitude in this country that it's acceptable to do the bare minimum and that it's your "right" not to be called to account.

    For those complaining that employers shouldn't be allowed to do this, consider this: I pay my employees from a pot of money I would otherwise take home myself. If times are hard, they get paid and I don't. I (and the rest of my staff) shouldn't be forced into carrying someone who isn't pulling his weight. The lengthy and costly dismissal procedures currently in place require the person to have done something wrong on paper. In short, it would be extremely difficult for me to fire the person simply for being an idle **** with a bad attitude - and he would be well aware of this.

    In addition, a change to the law along these lines should mean that opportunities become available more often and that the people who really deserve them get into them. Properly implemented, it ought to ensure that anyone with work ethic benefits along with employers and the economy itself.
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  15. What utter rot.

    What happens when a company wants to outsource 25% of the production to Bangladesh to increase the bottom line? Do you imagine that they will go carefully through the list of employees, carefully selecting between them? Of course not, they select the 25% who are cheapest to get shot of. And if they could lose half of those in a frenzied disciplinary exercise in the months running up to the redundancies, do you seriously think they wouldn't?
    • Like Like x 3