Is the proposal to dispense with unfair dismissal claims a good thing for employers?

3 November 2011

The abolition of unfair dismissal

We learnt last week that Adrian Beecroft, in his report apparently commissioned personally by the Prime Minister, has suggested that one way of helping businesses would be to abandon the ability of employees bringing unfair dismissal claims altogether.

This is undoubtedly a radical, but, I believe, misguided proposal. Why so?

  1. First of all, employers recruit when they have a business need to do so. No one wants surplus labour these days, and, if employers require extra support to carry out their business, they are not going to decline to recruit simply because of the potential possibility of a Tribunal claim sometime down the road.
  2. Secondly, the Government’s refrain that employers are not recruiting because they “perceive” these to be too much red tape is to a substantial extent, a vicious circle. There is a “perception” of too much red tape out there because the Government is saying so repeatedly these days. Once it has been canvassed as a big problem, it becomes one, and then needs to be “solved”.
  3. Just because employees are denied an unfair dismissal claim, does not mean that they will not look for a remedy. Just look at employees in the United States. They do not have a system of “unfair dismissal” over there, but employees find other ways to get back at employers, such as through discrimination claims and potentially large jury awards.
  4. Employees are inevitably entitled to basic rights. Employers recognise that. Rights involve expenditure of resources just as in other fields, such as clinical negligence, family, crime etc. That is not to say there is anything wrong in trying to make the system more efficient and to look to save costs where one reasonably can – indeed that is important - but to dispense with the right altogether is not a justifiable “fix”.

Protected conversations

But amongst all the heat generated last week over this area of the law, there is one proposal that has come to prominence, which I do think merits careful attention at the current time. Because of the state of the law at the moment, employers are understandably worried about having early “without prejudice” meetings with their employees at the start of a process that may lead to a termination of one sort or another. This is because they may be vulnerable if they cannot subsequently prove to a court that the “discussion” followed the raising of a “dispute”, and that as a result anything they say during the course of a “without prejudice” discussion may come back to haunt them in the event of an employee instituting proceedings before the Employment Tribunal. (It stems from the case of BNP v Mezzotero, where the employee raised a grievance when she returned from maternity leave, asserting that she was prevented from having her old job back. She was thereupon immediately ushered into a “without prejudice” meeting and was offered a “package” which she ultimately rejected. It was held subsequently, that evidence of that meeting was not protected by the “without prejudice” rule, as there was at that time no actual “dispute” to compromise.)

One good way of dealing with this very real practical problem would be to provide for “protected conversations”, whereby an employer may be in a position to talk to its employee and head off claims at an early stage, albeit by paying to buy out rights the employee might otherwise have. That could very much be a “win win” situation for employees as well.

Interestingly, the Government seems to have shown some real interest in this idea – hence its inclusion in the speech by the Deputy Prime Minister, Nick Clegg, last Wednesday.

Expect to see this becoming much more of a focus in the weeks and months ahead…

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