It could become easier to get sacked

A planned government review into employment law could make it easier for you to be sacked...

All eyes will be on businesses as the cuts begin to really bite over the next year or so.

The Coalition Government is relying on a swelling private sector to pick up the unemployment tab left by public sector efficiency savings. One way Chancellor George Osborne aims to spur on these growing businesses is by reviewing redundancy laws and restricting the amount of compensation available to employees in cases of unfair dismissal and workplace discrimination.

The proposals have been widely criticised by the Labour Party and trade unions alike as a ‘bonfire of employee rights’.

But is this really an attack on the working classes? Or just a logical tactic to boost business and ultimately increase private sector job opportunities?

Redundancy protection

The review is aimed at increasing flexibility and cutting bureaucracy within employment law. One key way the government claims it will do this is by shortening the consultation period required for significant collective redundancies.

Ironically this piece of ‘bureaucracy’ was actually introduced by the Conservatives back in 1963. It requires any employer who wants to make 100 or more redundancies to notify the Business Secretary and consult with the employees in question at least 90 days in advance. The proposals announced this month could shrink this window to just 30 days.

Not only will this make it easier and quicker for companies to get rid of employees, it will also impact on the ability of unions to organise strike ballots in opposition to job losses.

The government are also proposing changes to the Transfer of Undertakings Protection of Employment Regulations (TUPE) which protects employees' pay and conditions if their companies are privatised or bought out. Lib Dem Employment Minister Ed Davey said that some companies believe the current laws, designed to preserve the terms and conditions of workers, were “gold plated and overly bureaucratic”.

Discrimination caps

The Chancellor has also turned his attention to employment tribunals and proposed a cap on employee compensation awards for unfair dismissals and discrimination in the workplace. The government claim this is to combat concerns in the business world of employees initiating weak or speculative claims in the hope of being awarded a large payout.

Looking at the employment tribunal figures from last year it becomes clear why businesses are becoming concerned; the number of accepted claims was 56% higher for 2009/10 than it was for 2008/9. But is this really solely indicative of an increase in weak, speculative claims? A look at the unemployment statistics for this period suggests not.

The rate of joblessness jumped rapidly to its current high level between late 2008 and 2010, rising from a little over the 1.5 million mark that it had been hovering around since the turn of the millennium to 2.45 million in March 2010. Logic surely says that if you have a rapid surge in unemployment, chances are you’ll also get a surge in unfair dismissals.

Factor in the financial crash and economic heart attack suffered by many companies throughout this period and it seems likely that in a bid to cling onto commercial life employers may have attempted to rapidly and unfairly offload their biggest cost; employees.

Granted, a tight post-crash jobs market does encourage employees to take a punt at filing a claim if they smell something fishy attached to their dismissal. But to suggest that large claim payouts are unjustified shows a remarkable lack of faith from the government in the employment tribunal.

Taking a closer look at the claim figures begins to shed more light on the real issue employers have with the current laws concerning unfair dismissal and workplace discrimination.

Legal fees

Out of the 50,900 claims brought in 2009/10, only 5,200 were successful while 22,400 were settled prior to a full tribunal hearing. This suggests that businesses are settling cases that they believe may be successful or may accrue astronomical legal costs prior to the hearing.

Now here’s the issue the government claims is unfairly hitting UK business. A speculative ex-employee can file a low risk, cheap claim using one of the many no-win, no-fee lawyers currently floating about. But for an employer to defend such a claim, the costs of legal advice can quickly spiral; hence why many just bite their tongue, and pay out to the claimant.

But is placing a cap on the maximum amount of compensation available to wronged employees really the way to avoid speculative claiming?

Forces of stagnation vs. forces of enterprise

When I hear the words ‘cap’ and ‘upper limit’ spoken by politicians, I am reminded of red-tape heavy, hodge-podge Blairite regulation, and hence immediately very suspicious.

Is it possible to put a maximum price on disability discrimination? Or racial prejudice in the workplace? I think not.

And on the subject of speculative claims, a look at Paragraph 40 of the Employment Tribunals Rule of Procedure reveals that in the event of ‘vexatious, abusive or disruptive’ tribunal claims, the claimant will actually be liable for all costs. So employers do actually have more protection against speculative claims from employers than the government are making out. Fortunately thanks to European employment law, it’s highly unlikely that this proposal will ever get off the ground anyway.

It seems the real need for tribunal reform is not located within employment law, but within the unfair practice of ‘no-win, no-fee’; a problem that also affects libel and personal injury defendants. Along with reform of this sort, a relaxation of redundancy laws will also eliminate the need for changes to unfair dismissal and workplace discrimination law. Struggling businesses will be able to improve their chances of survival by making employees redundant, quickly, cheaply and legally, while the risk posed to budding entrepreneurs and aspiring businessmen will be reduced and hence long term growth and innovation pushed.

Yet the government has to be careful not to excessively polarise this issue; as George Osborne risks doing when he condemns the trade unions as ‘the forces of stagnation attempting to stand in the way of the forces of enterprise’.

Profit and enterprise are important, but they are not the only measures of financial stability. In fact, for most people losing a job is a far more destabilising event than a shrinking economy or high inflation. Unfortunately, the later usually quickly leads to the former, making short term job losses through an increase in market flexibility an entirely necessary step to guarantee a stable and sustainable future for employment in this country.

But all this is not to say that trade unions aren’t adding to this polarisation by flat out refusing to accept that an increase in market flexibility is necessary; even if it will bring about a rise in job insecurity.

There is a line to be drawn between a flexible approach to employment law and unfair concessions to the business hegemony. A bonfire of fundamental workers’ rights is not a price worth paying for a return to commercial growth.

What do you think?

Is this reform an attack on the workforce? Or is it a sensible way to stimulate UK business?

Have your say in the comment box below.

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