No fault dismissals will hinder not support growth11 May 2012
Iain Birrell says the Enterprise Bill is an exercise in limiting employment rights, not supporting growth
How does “giving employers more confidence to hire new staff” – one of the employment law reforms the Queen announced would be in her government’s Enterprise and Regulatory Reform Bill - support growth?
This pledge, first made in the Conservative’s 2010 election manifesto, has consistently been a euphemism for making it easier to fire people. Is this any different?
No fault dismissals came onto the agenda with the “leak” to the Telegraph of two-pages of a report by venture capitalist and Tory donor Adrian Beecroft. He recommended that employers be allowed to sack workers at will and without explanation in return for a compensation payment. This would, he claimed, promote economic growth.
There was uproar from the unions who pointed out that growth is not achieved through more unstable employment. Vince Cable claimed to have blocked the plan for all but micro-businesses. Hence the current BIS call for evidence.
It’s being trotted out by ministers with such regularity that it appears the government’s “no fault dismissal” idea is gaining ground. This is despite the call for evidence (these are meant to be followed by a formal consultation, though they are both sham exercises) which proposes enabling only micro-businesses employing less than 10 employees to sack people, with a set amount of compensation, without going through the formal dismissal procedure.
The amount of compensation is unspecified but nothing more than a small amount is envisaged.
But the Queen’s Speech didn’t mention a limit on business size. Beecroft, it seems, never went away.
The Enterprise Bill isn’t really about growth. If it were if would include action to make it easier for businesses to get loans from banks. Businesses cannot grow without investment. Cameron’s gimmicky Green Investment Bank, which is included in the Bill, to promote private sector investment in a greener economy won’t provide that.
Similarly is doesn’t review the VAT hike that chokes consumer spending, address the massive pool of unemployed young workers whose education and skills are currently lost to business, or a multitude of genuine inhibitors in the economy.
Employment rights don’t stifle business growth. Job insecurity does. If workers don’t spend they don’t consume and businesses fail. It is hard to see the Enterprise Bill as being little more than the continuation of an ideologically driven exercise in limiting employment rights, concealed under the cloak of recovery.
And if anyone has taken heart from the lack of specific reference to the introduction of fees in employment tribunals, they haven’t gone away either.
Justice minister Jonathan Djanogly launched a paper at the Dispute Resolution Commitment Breakfast he held with FT350 business leaders this week. It commits to consulting on introducing fees for Employment Tribunals “to give employees a financial stake in their own cases and to encourage users of the system to think more carefully about whether the tribunal provides the best way to resolve their dispute.”
That statement is as out of touch with reality as you would expect from a man whose children owned shares in a family company; who hired a private eye to find the source of embarrassing disclosures about his spending habits; and who repaid £25,000 following the expenses scandal.
To be fair to him, it only reflects his government’s own suggestion in the recent consultation that every worker who did not seek redress for their rights being trampled on would actually be better off by £1,300 as that is what they would save through silence.
Charging up to £1,750 just to lodge an ET claim isn’t benevolently giving employees a financial stake in their own cases, it’s a straightforward denial of access to justice and will hit hard against working people when they are at their most vulnerable. That is not going to promote growth, enterprise or the consumer confidence which is necessary to both.