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 111.

    Has nobody heard of Toyota, or, Honda, or, Harley Davidson?

    Unfortunately in the UK, management was taken over by the IS9000 lot, HR no-hopers and micromanagers. The good managers just “gave up”.

    This proposal will just reinforce this trend.

  • rate this

    Comment number 110.

    99. PH73
    "80. ship-of-fools

    Life is political and these proposals are politically motivated in the extreme or are you too immured in your self-delusion to even comprehend this? Do wake up!

  • rate this

    Comment number 109.

    steve"And such trivial roles as Nursing, Medicine, Teaching and the Police, which in reality accounted for the majority of increased public sector"

    I dont think we acquired over 500000 nurses teachers and police. At any rate, you have chosen 3 areas which have attracted scrutiny of their standards in recent years. They certainly should not be used as a barrier to identifying waste in the ps

  • rate this

    Comment number 108.

    This really is extraordinary. In the great scheme of things, as a proportion of the workforce very few people bring tribunal claims and the awards are, on average, very small. The statutory maximum is just over £60,000. There is no "no-win, no fee" because costs are rarely awarded, removing the incentive for most solicitors.

  • rate this

    Comment number 107.

    In football, if a team does not perform to expectations, then the manager is shown the door. In most workplaces the managers are a protected species and are generally untouchable. Morale suffers as a consequence,and the manager then looks for the "troublemakers", and shifts them out by whatever means possible. I have seen this happen so many times, I am no longer surprised when it happens again.

  • rate this

    Comment number 106.

    CityBoyCityBoy wrote:
    "Unfair dismissal cases are a little like whiplash claims in car accidents. Might as well see what you can get by complaining as much as possible. Clearly, there is a need to protect the genuine claimants, but most of the claims are simply taking the proverbial."

    Of course you have some facts to back up this statement?

  • rate this

    Comment number 105.

    This is from a government that wants to tackle joblessness. The same mistake as the 80's and 90's. Do the politicians not study economic history. Pathetic. Won't be voting for a government that promotes such oppression again. Lesson learned.

  • rate this

    Comment number 104.

    Lib Dems = Tory Party lapdogs, Maggie would be so proud of you Vince & Co. As we all know we are going backwards to the dark days of the 1980's it is not just a case of silly no win no fee situations employers are being given a clear field to sack, intimidate, bully workers it is going to be back to the 18 century with this coalition in charge.

  • rate this

    Comment number 103.

    Surely the way to speed things up and cut costs is for both parties to not have solicitors but to attend a meeting with a legally qualified independant person who will listen to arguments view evidence and make a lawful decision. Solisitors delay and misrepresent to increase costs and ensure their livelihoods.

  • rate this

    Comment number 102.

    After working in the public sector as manager for years, anyone who thinks the dice are loaded in favour of the employer clearly has no idea of the reality of the situation. It was all but impossible to sack even the most useless, lazy, incompetent and absentee staff no matter what. Tribunals were their instant reaction (never mind established procedures) and the unions aided and abettted them.

  • rate this

    Comment number 101.

    A conversation is usually considered to be a two way process. I assume therefore that 'protected conversations' will work in both directions so that any home truths that the employee might deliver to the employer, about, for example, their woeful management style or general level of competence, cannot then be used in future proceedings as evidence against the employee.

  • rate this

    Comment number 100.

    I agree that in some situations, it is a little too hard to get rid of people who are performing badly, I don't think this is the answer. These regulations do act as protection for the employee, and if you give room for companies to make people redundant easily, then it will be abused. It's not too say it will be widespread, but it will (and does) happen, and more often.

  • rate this

    Comment number 99.

    "80. ship-of-fools

    Back to the days of Thatcherite heel on the neck employment law and the undermining and elimination of employees rights.
    Just remind me who's in No.10 again would you?........... Oh yes I remember now......... it's an over-privileged Old Etonian, Tory toff!"

    Could we have one HYS that doesn't turn into a party political broadcast?

  • rate this

    Comment number 98.

    "If business leaders have welcomed these proposals from Mr Cable - that alone tells you that they must be unfair"

    I saw that kind of closed mind judgement widely used by unions in the 70`s, especially in manufacturing, need I say more about such bollus?

  • rate this

    Comment number 97.

    All and I mean all should be open and be prepared to speak their mind. Should non performers be shielded by legislation, no. But this is not about shielding employees it is about open management. Open communication is the route to any companies succes. Saying things behind closed doors will only exasperate any situation and will lead to more trouble in the long run.

  • rate this

    Comment number 96.

    So nice to see a lack of balanced comments.

    Employment law should protect workers from unfair and arbitrary decisions yet at the same time allow management to actual manage, which sometime leads to job losses.

    The current system does not achieve this. It is expensive, slow and thanks to last Lab govt, micro-manages the process such that any deviation results in employer losing

  • rate this

    Comment number 95.

    The employment line will of course include the explosion of ps jobs in such essential fields as route to school planning and equality , diversity and integration
    And such trivial roles as Nursing, Medicine, Teaching and the Police, which in reality accounted for the majority of increased public sector employment and will account for the majority of the jobs cut by the Tories.

  • rate this

    Comment number 94.

    re. the extension from one year what is v.cable trying to correct, or should it be fix?

  • rate this

    Comment number 93.

    This is just not on! What will happen to all those union reps and officers that will be thrown on to the scrap heap once they can't attend tribunal hearings?

  • rate this

    Comment number 92.

    PH73. Most people are willing to take responsibility. But, when you have 2 or more managers intent on ladder climbing or empire building, issuing contradictory orders to the staff then you have a big problem. Managers in this country do not know how to manage, and shift all the blame for their inability onto the workforce. It's THEY who will not take responsibility.


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