Good riddance to 'no-fault dismissal'?

I read with interest over the weekend that the government has decided to drop a recommendation for a new ‘hire and fire’ law which would have allowed small businesses to dismiss workers without giving a reason.


Instead, Vince Cable, the business secretary, wants to introduce settlement agreements, in which staff agree to leave without being able to go to a tribunal – but get a pay-off in return.


The decision to drop no-fault dismissal, which was proposed in a government-commissioned report by venture capitalist Adrian Beecroft, was broadly welcomed by the business community and trade unions.


To be honest, I can see it from both sides. One the one hand, our employment law needs a shake-up; on the other, it’s downright ludicrous to effectively give firms the power to sack workers who are not at fault.


There are certainly concerns that current dismissal rules are too bureaucratic, complex and difficult to apply – and the threat of tribunal often looms large over firms.


The road to dismissal for poor performance is a long and tortuous one – it involves meetings, workload and performance plans, training, before verbal and written warnings and eventually dismissal.


It is costly and it is also hell for all involved – a deeply unpleasant business all-round that is not helped by the possibility of being taken to an employment tribunal afterward. It is no wonder, then, that many businesses simply avoid it altogether.


So it’s certainly the case that some reform is needed – but the idea of a ‘no-fault dismissal’ rule just seems so much of a volte-face that leaves employees with bare-bones job security, feeling vulnerable and insecure.


Maybe the issue, then, is not about changing employment law but taking a fresh look at how we manage our employees.


Let’s get back to a culture of positive engagement, where managers are actively looking to improve the performance of their staff.


Perhaps that will spur the economy – rather than a freewheeling ‘hire and fire’ rule.


Note – the government is also proposing cutting the cap on compensation for unfair dismissal claims from £72,000 – see all the details here: