Compensated No Fault Dismissals Replace Right to Claim Unfair Dismissal

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An article in today’s Daily Telegraph refers to a leaked report commissioned by David Cameron, recommending the right to claim unfair dismissal should be replaced by new Compensated No Fault Dismissals. The report claims that “it is too easy for employees to claim they have been unfairly treated and to gain significant compensation” and suggests that the current rules relating to unfair dismissal should be replaced by a new system where employees would be dismissed and receive basic notice and redundancy pay. The definition of “Compensated No Fault Dismissals” is stated in the report as: “To resolve the problem of the unfair dismissal process one could simply say that if discrimination was not involved an employer could dismiss an employee at any time without giving a reason and paying the employee only for his or her contracted notice period. Unfair dismissal is a UK concept and not an EU one, and so there are no legal barriers to doing this. However, this would probably neither be fair to employees nor politically acceptable. I therefore propose instead that dismissal should not be deemed to be unfair if no particular reason is specified but the notice periods and termination payments are the same as those that apply in a case of redundancy. This would give certainty to the employer that an employee can be dismissed in a relatively short period at a known cost and with no fear of a referral to a tribunal provided no discrimination is involved. It could be known as Compensated No Fault Dismissal.” The report states that there would still be a place for redundancy where there is no longer a requirement for a job to be done. Compensated No Fault Dismissal would be used where the person in the role is not performing to the required standard and a more able employee could be recruited in their place so unemployment would not increase. It is recognised that there will be some losers under the proposed new system: “The downside of the proposal is that some people would be dismissed simply because their employer did not like them. While this is sad I believe it is a price worth paying for all the benefits that would result from the change.” The Daily Telegraph states that the 12th October report has been circulated around Whitehall and has the backing of the Prime Minister and the Chancellor of the Exchequer and is likely to be published later this year. We have written an open letter to the Daily Telegraph as follows: Sir, Having been advising SME’s for over 16 years in respect of their HR procedures, and in that time having never had a client successfully taken to a tribunal or fall foul of any HR related legislation, I disagree with yesterday’s report’s findings that legislation allows workers to simply “coast along”. The problem is not current legislation but poor performance management, a problem which can be fixed by properly training and supporting managers who may lack the knowledge and experience to deal with the matter confidently and often before it becomes an issue in the first place. With the support of an outsourced HR company this is neither difficult nor expensive, and not only will this enable employers to safely dismiss employees who consistently under perform, but will lead to a happier workplace in general. We should not be resorting to changing legislation and eroding the rights of employees in lieu of training people how to confidently manage their staff. Kind Regards, Angela Rhodes Crispin Rhodes

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