Unfair dismissal: Vince Cable ponders new hire-and-fire rules

Worker Employees will have to work for longer before being able to go to a tribunal

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Staff who work for small businesses could lose their right to claim unfair dismissal under plans being considered.

Ministers want views on whether firms with 10 or fewer employees should be able to sack staff without risk of a tribunal if they pay compensation.

Business Secretary Vince Cable said he wanted the process for getting rid of staff to be "simpler and quicker".

Unions oppose the idea. Labour called for measures to make it easier to hire people rather than to fire them.

Announcing a consultation on changes to employment legislation, Mr Cable said he wanted to help firms expand without making existing staff feel insecure.

The key points include:

  • a "call for evidence" on whether "micro-firms" can dismiss staff without their agreement and without them being taken to a tribunal if they pay compensation
  • a consultation on "protected conversations", which would allow employers to have frank discussions about poor performance with workers without fear that they could be used as evidence in a tribunal
  • a "call for evidence" on the length of time required for a consultation period on planned redundancies; it is currently 90 days, but the government is considering reducing that to 30
  • a requirement for all claims to go to the conciliation service Acas before reaching employment tribunal
  • options for a "rapid resolution scheme" for more simple cases to be settled within three months

The business secretary also confirmed plans to make people work for two years before they could make a claim for unfair dismissal from April - up from one year at present.

Mr Cable said the proposals would not erode workers' rights but would cut "unnecessary bureaucracy" and reduce the number of cases going to employment tribunal, which have risen 40% in the past three years.

In a speech to the manufacturers organisation EEF, he said he wanted a "radical slimming down of the existing dismissal process" which would help firms grow but protect individual rights.

But he insisted he was not encouraging a "hire and fire" culture.

"There is a genuine concern that if you take measures which create substantial job insecurity this will affect people's general confidence in life and willingness to spend," he said.

"But we have to balance that against the need to create an environment in which firms will expand and take on new employees".

Beecroft report

A recent government-commissioned report suggested that what it termed "unproductive workers" should lose their right to claim unfair dismissal.

The Lib Dems were reported to have rejected these proposals from the businessman and Conservative donor Adrian Beecroft, believing they would not help the labour market at a difficult time for the economy.

Start Quote

Giving companies greater flexibility to hire and fire will provide them with greater confidence to take people on”

End Quote British Chambers of Commerce

Mr Cable said the coalition partners were agreed on their broad objectives but he insisted he had "no preconceived views" on what the outcome of the consultation would be.

"The agreement is we need to protect employee rights, maintain job security - that is very important for the economy - but also we need growth."

Business groups, such as the CBI and the British Chambers of Commerce, welcomed the proposals and called for them to be implemented quickly.

"Vince Cable is right to say that dismissal procedures need to be slimmed down," Dr Adam Marshall, director of policy at the British Chambers of Commerce (BCC), said.

"It may seem counterintuitive, but giving companies greater flexibility to hire and fire will provide them with greater confidence to take people on."

'Retrograde step'

But Paul Kenny, general secretary of the GMB union, said the agenda was being driven by big business which "wanted the balance of power in the workplace tilted even more against the ordinary worker".

He said: "These changes will make it harder for hundreds of thousands of workers to bring cases of victimisation, unfairness and bullying at work.

"This will just sweep abuse under the carpet."

Mr Kenny also said a plan to require only one judge to preside over unfair dismissal cases was "retrograde" as it would remove "the voice of business and the shop floor" from proceedings.

Shadow business secretary Chuka Umunna said Labour agreed that the tribunal system - which had 218,000 cases referred to it last year - needed reform.

But he added: "Watering down people's rights at work by doubling the service requirement to claim for unfair dismissal from one to two years is not a substitute for a credible plan for growth.

"Instead of seeking to make it easier to fire people, the government should be looking to make it easier to hire people at a time when their reckless economic policies have pushed up unemployment to a 17-year high."


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  • rate this

    Comment number 90.

    It is incredible the number of people who believe they have a "right" to a job. If they had the gumption and motivation to take a risk and set up a business themselves they would soon learn an important lesson. That lesson would be what it is like to live in the real world and the extent that business is bogged down and held back by employment laws. End the tribunal gravy train - yes!

  • rate this

    Comment number 89.

    There is only one way to get the best out of people and that is with clear and reasonable conditions and work standards, and measurable targets, coupled with regular feedback and face to face reviews of progress. Not just once a year.
    Trouble is it's time consuming, can easily become bureaucratic, and it needs skill and candour to make it work.
    Unsurprisingly, it doesn't always happen.

  • rate this

    Comment number 86.

    What about when a new boss comes into a company and just plain doesn't like someone regardless of their performance? This is just another example of the government being paid by business and applying policy for business

  • rate this

    Comment number 84.

    How do you record a protected conversation? Surely this is another version of an Aide Memoire but it needs to be recorded with both managers and employees responses to be fair. Any protected conversation means nothing as only those things that can be used in a tribunal will count.

  • rate this

    Comment number 82.

    I was in a job for 11 months, loved it, worked hard, never criticised. Was told 3 weeks before the my first year's employment that my contract was terminated with no reasons given. Found out later that a director's mate was put in my place! How can this proposal help people other than make them insecure in such dire times !! Well done Vince, just join the Tory party and be done with it.


Comments 5 of 11


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