As the government looks to improve the way businesses hire, manage and end their relationships with employees, it has called for evidence on a proposal that would enable micro businesses – which employ less than 10 people – to make compensated no-fault dismissals.
This would mean that employees could be dismissed for no particular reason, and without any formal proceedings, as long as they receive a set amount of compensation. Should the employer have a valid cause for dismissing the employee and act reasonably when doing so, then there would be no need to pay the compensatory amount.
The move acknowledges the fact that such businesses are less able to access specialist HR and legal guidance, leaving them more cautious about applying disciplinary procedures and more fearful of the likelihood of employment tribunal claims – especially as the cost of defending such an action could threaten the viability of the business.
While the proposals would ensure that employees could not bring an employment tribunal claim for unfair dismissal, they would retain their rights not to be discriminated against or dismissed for an automatically unfair reason, such as whistle-blowing or asserting a statutory right.
In addition, the call for evidence is seeking views on how dismissal processes can be made simpler, easier and quicker for other businesses.
Business Secretary Vince Cable said: “We recognise that not all jobs work out for both parties – the staff member doesn’t quite fit or simply the relationship has irretrievably broken down. And for micros in particular, who often don’t have legal or HR teams, the process to let a staff member go can be a daunting and complicated process.
“We want to give businesses the confidence to hire new staff and make sure when a dismissal needs to be made, they aren’t tied up in red tape. This is an effort to see how extensive the problem is and shed some light on the desire for a change to the rules.”
Employers, employees, business organisations and other interested parties have until 8th June to provide their views. For more information, please contact us.