UK Employment law has been dominated by the issue of reform again, with the Beecroft report and then the Enterprise and Regulatory Reform Bill (ERR) being published shortly afterwards. Vince Cable then shuffled back centre stage describing the Beecroft report as “bonkers”. In reply, Mr Beecroft, no doubt frothing at the mouth in frenzy, called Saint Vince a socialist. Aargh no! Not the “S” Word! Wash your mouth out Beecroft, let’s have none of that foul language here please.
The Institute of Directors then waded in calling the Government’s attempts to reform employment law a farce, mainly because Vince Cable seemed to have prejudged the issue by calling the proposals “nonsense”. The Telegraph reports the EEF (an organisation supporting the manufacturing sector) as saying its members had little appetite for no-fault dismissals and might be harmful to collaborative working between employers and employees. Quite right too.
The Beecroft report is lengthy and sets out his plans to make it easier to dismiss underperforming employees, or as he puts it those who “coast” along at work. His solution is to introduce “Compensated No Fault Dismissal” (CNFD) whereby following a short period of consultation (during which time the employee either pulls their socks up or is sent to a less demanding role) the employee is dismissed with a payment equivalent to the sum they would have received on redundancy. Beecroft fortunately recognised the elephant trap that lay ahead if the payment for CNFD had been less than a redundancy payment. No reason would be needed for a CNFD. As Beecroft notes in his Executive summary;
“The downside of the proposal is that some people would be dismissed simply because their employer did not like them. While this is sad I believe it is a price worth paying for all the benefits that would result from the change.”
This demonstrates in a nutshell the one-sided nature of the report: employees are either a bunch of lazy, “coasting”, wannabee litigants just waiting for the chance to embroil their employers in costly, lengthy Tribunal disputes or, at best, expendable resources to be sacked on a whim if their employer doesn’t like them. It ignores the reality of the workplace where there is a balance of power, which naturally rests with the employer, especially when the jobs market is depressed. Beecroft overlooks another fundamental point, succinctly tweeted by Sean Jones of 11KBW a while ago (and which I re-tweeted)
The impetus for this report was to free business from unnecessary regulation, allowing employers to get on with making a profit and thus enabling the economy to grow. However, at page 12 of the report it states
“Quantifying the loss of jobs arising from the burden of regulation, and the economic value of those jobs is an impossible task. How many more businesses would there be, how many people would they employ, how many more people would existing businesses employ, how profitable would all these businesses be? Who knows?”
Sorry? He doesn’t actually know the economic effect this will have?
It continues
“There is a growing feeling that in the small business sector the price (of current regulation) is not worth paying”
So, the empirical basis for his report is nothing more than a “feeling”. The grand plan for reviving the British economy is based on nothing more substantial. Is this how all government policy is to be shaped?
“Businesses could choose which to opt out of, and would make this clear to potential employees. Nobody would be forced to join a company that had opted out of a regulation that they felt any company they worked for must follow“
You can see why Vince Cable thought these plans were bonkers. How many employees will be in the position to choose between employers anyway? It would create a very complicated legal environment for both employers and employees.
Beecroft also looks at other issues. Third party discrimination of employees should be abolished, along with auto-enrolment into pension schemes. Flexible parental leave should be deferred until the economy picks up. TUPE should be stripped of its gold-plating, the Agency Workers Regs should be repealed and the consultation period in large redundancy programmes should be reduced from 90 to 30 days. The report suggests simplifying the Employment Tribunal process and the ACAS Code of Practice on Discipline and Grievances. The former is already being looked at and is the latter really so very difficult? Investigate allegation thoroughly and then three step disciplinary/grievance process. How would you simplify that? Possibly by way of CNFD? It is a recipe for great unfairness, especially when the payment due under CNFD might not adequately compensate an employee for the length of time they might be out of work following dismissal, which may now be lengthy because of the recession.
Perhaps the most radical suggestion the Beecroft report makes is to limit discrimination awards by not making discrimination a tort, allowing a cap to be placed on loss of earnings awards in such cases. Injury to feelings awards would not be capped. In saying this he is getting to the nub of what really bothers employers, and with good reason. Discrimination claims are uncapped and potentially ruinously expensive. Most do not succeed at Tribunal but settle “early doors”. They’re also an import from European law so there isn’t much that the UK government can do about it, save with this sort of tinkering. Repeal is politically unthinkable and rightly so. The same issue of limiting awards comes up under the ERR and it might be worthy of consideration – more in Part 2.
What Beecroft (and many others) overlook is that although employees do have many legal rights and can make life very difficult for their employers (especially small businesses lacking sophisticated HR functions) there is an inequality of bargaining power between employer and employed. Most employees have only one source of income and bills to pay: even issuing a grievance can be a risky career move, let along suing your boss at an Employment Tribunal. Most employees will (and do) keep their heads down because they don’t want to be unemployed. Most employees are good and conscientious workers. Perhaps the ones that Beecroft highlights as “coasting” actually haven’t been properly trained or given proper targets? Disputes in the workplace can be just as much about bad management as bolshy workers enforcing their rights.
At the moment the Beecroft report is just that, a report. Whether its recommendations get introduced into law is another matter. It has clearly caused divisions at Cabinet level, with Tories supposed to be in favour and Lib Dems against, but then the Telegraph reported that Vince Cable actually liked the report and someone else said that the Prime Minister had gone cold on it so, who knows? In fact it seems that the business lobby is getting fed up with the government taking so long to actually achieve any reform at all, so what must have looked like an easy political target has now become a rather thorny and contentious issue.
In part 2 , I’ll look at ERR.
He one sided nature of this report is indeed disturbing. Far too often employees are singled out in reports such as Beecroft and government rhetoric as being the major problem that ‘employers’ face with regards to employment regulation, and that the solution to our supposed economic woes is to relax or abolish such regulation thereby exposing employees to the burden of job security worry. Seldom however have I ever seen discussion on whether or not the employers or directors of companies may themselves be at fault with regards to business success. Just because a person is an employer or director does not mean that they themselves might ot be coasting or underperforming.
I have seen on numerous ocassions situations where employees themselves work their respective backsides off only to be fighting a losing battle against their employer who failed to direct or push the business in a successful direction through a mixture of bad management / judgment / decision making and sheer sloth only for the company to eventually be wound up at the expense of several massively out of pocket suppliers and employees. In fact it was only through the efforts of the employees themselves that in one such case the business was able to trade as long as it did by cutting costs and overhead, retaining profit where none was forthcoming from an unsuccessful sales department until the sheer weight of management failure sunk the ship. Not only that, but the director of that particular company on many ocassions expressed both disgust at government regulation of business, and on many ocassions also committed numerous infractions of health and safety, discrimination and various other areas of employment, company and other law exposing employees to physical and other risk.
Where does Beecroft or government rhetoric stand on such organisations of which my experiences are certainly not unique, organisations which do not under any circumstances contribute to the economy in any healthy way, and if deregulated would only expose more individuals and organisations to a heightened risk?
Employers are not always those who are in the right and deserving of greater latitude, and contrary to the stance taken by many small time business directors, the fact that they may own a business does not mean automatically that they are entitled to be seen in any better light simply because of that fact.
Thanks Mike, I entirely agree with you. It’s a one-sided report and doesn’t address any of the issues like management underperformance. No doubt Beecroft would say that red tape is entirely responsible for stopping employers from managing properly.
M
[...] we could have been facing the nightmare of “Compensated No Fault Dismissals”, for which we should be grateful. The proposals do contain a great deal of potential unfairness [...]