The Government has set out a range of measures to make it easier for small businesses to hire and fire staff.
The plans include that from 2012, the qualification period for an employee of any business to claim unfair dismissal will be extended from one to two years.
The Ministry of Justice will consult on introducing a fee for an employee to take their employer to a tribunal, which could see higher claims charged higher fees.
The Department for Business Innovation and Skills will consult on allowing firms with fewer than 10 employees to compensate and let staff go without a reason. It will also seek views on how best to involve the Advisory, Conciliation and Arbitration Service in disputes before they go to a tribunal.
The BIS will aim to simplify national minimum wage regulations by removing out-of date-regulations from the information given to employers.
A loophole in legislation intended to allow workers to whistleblow on breaches of colleagues’ employment contracts means employees can blow the whistle on breaches of their own contract. From April 2012, the proposals are for that loophole to be closed so staff must follow the proper channels for complaints about breach of contract.
The BIS will also consult on introducing “protected conversations” where firms and staff can discuss poor performance without the talks being used in future tribunals and will consult on simplifying compromise agreements, which allow employment contracts to be ended with compensation and with- out future recourse to tribunals.
Business Secretary Vince Cable said many companies feel employment law is a barrier to growth. He said: “We are knocking down that barrier. Getting the state out of the way, making it easier for businesses to take on staff and improving the process for when staff have to be let go.”
Derbyshire Booth Financial Management managing director Greg Heath says: “I know of firms paying people off rather than going to tribunals because it is cheaper, so anything that improves that is a step in the right direction.”
Paul Duckworth IFA owner Paul Duckworth says: “It is a serious problem when looking to take on staff that letting them go if you need to can be expensive. In America, there is much more of a hire and fire culture and that means firms react more quickly to changes in economic weather.”
Government plans on the hiring and firing process
- Extending the qualification period for employees to claim unfair dismissal from one to two years.
- Consulting on introducing employee fees for employment tribunals. Higher claims could incur higher fees.
- Consulting on introducing ’compensated no fault dismissals’ for firms with less than 10 employees.
- Consulting on simplifying ’compromise agreements’ which allow employment contracts to be ended with compensation and without future recourse to tribunals.
- Consulting on cutting the 90-day consultation period for mass redundancies of more than 100 staff.
- Closing the whistleblower loophole that allows employees to flag up breaches of their own employment contracts from April 2012.
- Consulting on introducing ’protected conversations’ to discuss poor performance which cannot be used in employment tribunals.