Adrian Beecroft’s Report on employment law had been gathering dust since its completion in October 2011 - until all of a sudden last week it was leaked, published and strangled at birth in a matter of hours.
Curiously, his introduction omits to state who commissioned the report. Nor are we told what research he undertook in producing his report. But he makes clear his purpose in these words: “Yet much of employment law and regulation impedes the search for efficiency and competitiveness. It deters small businesses in particular from wanting to take on more employees: as a result they grow more slowly than they otherwise might.” And he goes on to make the bold claim that the existence of regulations exacerbates what he describes as a national problem of high unemployment.
On the face of it, the treatment of the report may say more about a continuing ability of the minority party in the coalition to exercise influence within government, no doubt to the dismay of Tory backbenchers, than its content. But the question remains, does his analysis bear scrutiny based on experience advising in the field, and what of his recommendations?
The real target, first up in his report, is unfair dismissal. This has generated most interest in the press.
The concept was first introduced more than 40 years ago in the Industrial Relations Act 1971. There has always been a minimum qualifying service and a cap on compensation. The former is in the process of increasing from one to two years while the latter has increased from £4,180 in 1972 to £85,200 today. It goes up broadly with inflation each year but there was a fourfold increase overnight effected early in the first New Labour administration. At one point there was a longer qualifying service for small employers but that has long since gone.
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Beecroft favours scrapping the whole concept of unfair dismissal. His fallback is to allow dismissal without reason provided the employer makes an enhanced leaving payment based on the employee’s salary and length of service. He mentions a maximum of £12,000.
The right not to be unfairly dismissed, and the concommitant ability to challenge any dismissal at a public hearing, has become one of the most basic workplace protections. Many consider that, if there is a flaw in the present regime, it is precisely the cap of £72,300. Originally race and sex claims were capped at the same amount as unfair dismissal, but that changed in 1993 as the result of a successful challenge by reference to the underlying European directive. Here, as Beecroft correctly observes, the UK is not constrained by Europe, but why should dismissal from a job give rise to a strictly limited remedy while discrimination within employment, or for that matter whistleblowing resulting in a detriment, can lead to untold compensation? Only last week, we were reading about a multimillion-pound claim brought by Michael Woodford against Olympus for whistleblowing following employment of less than two weeks.
There have been various attempts to circumvent the limit on compensation for unfair and wrongful dismissal by reference not to Europe but to the common law. The latest attempt, which was to recover damages at large for lost reputation flowing from the manner of dismissal, failed by four votes to three in the Supreme Court earlier this year (Edwards v Chesterfield Royal Hospital NHS Foundation).
I cannot recall any client withholding employment for fear of an unfair dismissal claim at a future juncture. And it is rare for any employer to build into its procedures automatic review of all employees shortly before they acquire the qualifying service for unfair dismissal. That way any potential cost could be avoided by immediate termination. I question the general proposition that the existing laws deter employment.
What of Beecroft’s other recommendations? Well there is a mixed bag ranging over such diverse matters as discrimination, employment tribunal procedures, pensions, criminal records, overseas workers and collective redundancies and, of course, TUPE - the Transfer of Undertakings (Protection of Employment). The report is short on evidence and long on recommendations. The prejudices of its author are never far from view.
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Anthony Fincham is head of the UK employment team at CMS Cameron McKenna LLP