21 June 2012

No-fault dismissal plans ‘expected to be shelved’

The Government is expected to drop controversial plans to introduce no-fault dismissals after the proposals reportedly failed to win the support of businesses.

The measure, which would have allowed small businesses to dismiss workers without giving a reason, was among the recommendations outlined in a report by the venture capitalist Adrian Beecroft.

While there has been no official confirmation that the plans have been axed, reports suggest that only a minority of the businesses that responded to the consultation were in favour of the measure.

The proposal has also been left out of the Enterprise and Regulatory Reform Bill which is currently being debated in the House of Commons.

The Government's aim to promote voluntary ‘settlement agreements’ is now being viewed as an alternative to the contentious no-fault dismissal measure.

Settlement agreements would enable employers to encourage under-performing staff to leave in return for an agreed pay-off.

‘If you can leave on agreed terms, you can leave with dignity intact, you're not compromised in the labour market, and you can tell your friends you chose to leave,’ said the employment minister, Norman Lamb. ‘It's much better than being sacked.’

Responding to the latest development, Steve Radley, Director of Policy at EEF, the manufacturers' organisation, said: ‘Government is right to reject proposals for no-fault dismissal as a red herring. The case for it is far from proven, with limited benefits and no evidence that it would increase recruitment.

‘Right now there are more pressing employment issues that really matter to business. The Enterprise and Regulatory Reform Bill needs to deliver the flexibility that will support the growth and jobs our economy desperately needs’.

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