Two employers’ organisations have broken ranks with much of the rest of industry in rejecting the controversial “no-fault dismissal” prosposals put forward by Adrian Beecroft, the venture capitalist advising No 10 on labour market reform.
The proposals have been criticised by trade unionists as giving employers the right to dismiss staff at will.
The EEF, the manufacturers’ association, has consulted its members and found “little support” for no-fault dismissal, though it does believe that other aspects of the Beecroft report are worth considering. The Federation of Small Businesses said that present unfair dismissal laws were adequate and that a no-fault dismissal regime “should not be necessary”.
Other organisations such as the CBI, the Institute of Directors and the British Chambers of Commerce have broadly supported the measure, though not all have published their formal response to Beecroft. The IoD said that the proposals were “broadly correct” and that it fully backed compensated no-fault dismissal. The CBI said that some form of this “could help small firms”, though there were other labour market rules, such as the agency workers’ directive, that were also hindering job creation.
The BCC said that the fear of not being able to dismiss a troublesome employee was preventing many businesses from recruiting.
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Some employers are concerned that no-fault dismissal may backfire on industry because it is regarded as biased against the employee. The EEF said that the proposals risked “undermining the gains that employers have made in increasing flexibility and productivity by working more collaboratively with their employees”. Instead the organisation has set out a five-point plan, some of which overlaps with Beecroft, for employment reform. It includes reducing the 90-day consultation period for collective redundancy to 30 days and streamlining employment tribunals while requiring claimants to lodge fees before a claim.
Terry Scuoler, chief executive of EEF, said that the benefits of no-fault dismissal “look pretty limited, and we have seen no evidence that it would increase recruitment”.
When the proposals leaked out last month they were dismissed by Vince Cable, the Business Secretary, as “bonkers”. Mr Beecroft, a Tory Party donor, responded by describing Mr Cable as “one of the Left” who “appears to do very little to support business”.
Unite branded the Beecroft report “the worst attack on our employment rights in a generation”.
Submissions to the Department for Business, Innovation and Skills on the report must be made by Friday.