Unproductive workers should lose their right to claim unfair dismissal, a leaked government report says. The report, commissioned by the Prime Minister, argues this would mean more capable people would replace those sacked, boosting economic growth. The report is quoted as saying that under current rules workers are allowed to "coast along" with some proving impossible to sack. However, when challenged, Downing Street has said changes to unfair dismissal rules are "unlikely". This follows on from the recent announcement that the right to make a claim for unfair dismissal will only accrue after 2 years’ service from April 2012. This is an increase from the current one year level.
The report goes further in calling for an end to unfair dismissal, a regulation that the report's author thinks is particularly abused by some in the public sector. Employers also fear expanding because new staff may prove "unknown quantities" who are impossible to sack. A final draft of the document, dated 12 October 2011, argues the first major issue for British enterprise is "the terrible impact of the current unfair dismissal rules on the efficiency and hence competitiveness of our businesses, and on the effectiveness and cost of our public services."
An adviser to one senior Liberal Democrat cabinet minister has said they believe such a move could undermine consumer confidence by creating large scale job insecurity and unions have attacked the report, warning that the move would "horrify" workers.
In 2010-11 the cost to the taxpayer of running employment tribunals and the Employment Appeal Tribunal in England, Wales and Scotland was more than £84m, according to the Ministry of Justice. The Treasury said that more than 80% of applications made to an employment tribunal did not result in a full hearing. Almost 40% of applicants withdrew their cases, but employers still had to pay legal fees in preparing a defence.
Our view is that it is unlikely unfair dismissal rights will be removed completely, but there is a real possibility that the government will make further amendments to relieve the burden on employers in relation to employment legislation.
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