Beecroft report: Industry responds to employment reforms

Posted on 23 May 2012

The political hot potato that is the Beecroft Report on Employment Law has a serious rationale that is being missed in the mud-slinging about no-fault dismissal.

Industry commentators provide their opinions on the effectiveness of labour market reforms for generating growth.

Beecroft asks if employment law reforms will stimulate growth
Beecroft asks if employment law reforms will stimulate growth

Iain Maxted, managing director, Guardian Global Technologies

[Extract of a letter to the Business Secretary] “I have been listening with interest over the last few days to the nonsense you have been postulating over small companies and employment rights.
Frankly I am astonished that the Business Secretary of UK plc is so ill-informed of the views – or perhaps you are simply ignoring them – of the vast majority of all business managers, not just those in SMEs.

“Employment rights, the ease with which employers are taken to Employment Tribunals and the bias of legislation in favour of employees and against employers is a constant concern to every employer I know, and I meet many.

Not one I know would agree with you that making it easier to dismiss, where an employment situation is not working out, would be detrimental to the country, business in general or, in the long term, to employees themselves.

“You should be actively encouraging employers to take the risks of employing more staff, by reducing those risks to a more manageable level, rather than giving us incentives to absolutely minimise recruitment because of the risks relating to employment protection which every additional employee brings.”

Lord Oakeshott, Liberal Democrat peer

“[Employee protection] is not a problem anymore, and I’d give credit to Margaret Thatcher. Since the strength of the unions were cracked in the 1980s we have a very flexible labour force. Look at Vauxhall.”

Andrea Rodney, Hone-All Precision, deep hole boring and drilling specialists

Andrea Rodney, Hone-All Precision
Andrea Rodney, MD of Hone-All Precision

“All assistance with the simplification and reduction of employment-based red tape is a positive move.

“But I very much doubt whether the claim that these recommendations will help boost growth is accurate. To boost growth in the UK, what we need is an effective tax system that encourages investment in capital equipment and the Government agencies to start providing the assistance they advertise by assisting and encouraging smaller companies to export.”

Simon Fenton, employment lawyer and partner, Thomas Eggar LLP

“We have no fault dismissals during the first two-years of someone’s employment now. If you wish to dismiss an employee after that, there is nothing currently really stopping an employer doing so, but it will usually involve some form of pay-off – as is suggested by Beecroft.

Simon Fenton, Thomas Eggar
Simon Fenton, employment lawyer at Thomas Eggar

“The proposal that employers with fewer than 10 employees should be exempt from unfair dismissal rules. Might this make them less attractive to prospective employees?”

“A much touted issue is the cap on compensation payments for unfair dismissal; but this exists already and currently stands at £72,300 and is calculated by reference to the employee’s losses. So, no fundamental change.

“The Transfer of Undertakings Regulations will be familiar to anyone who has taken over a business and are extremely complicated. A change to these regulations would be welcomed by everyone involved in dealing with them, but they are a creature of European law and the UK government has to comply with EU law.

Finally reducing consultation periods from 90-days to 30-days when considering making more than 100 employees redundant is hardly going to change the economic landscape.”

Roger Marsh, managing director, Rediweld Plastics and Rubber

Roger Marsh, managing director, Rediweld
Roger Marsh, managing director, Rediweld

“On no-fault dismissal I believe that the more flexibility employers have, the more likely they are to take on new staff. More often than not this will help the company grow, ensuring longer term security and provide that essential work experience that young people are finding so difficult to get.”


Terry Scuoler, chief executive, EEF
 The government has made a start in many of these areas that industry will support – such as reform of Employment Tribunals, TUPE and collective redundancy rules – and the challenge is now to deliver on this.

“In other areas such as Compensated no-fault dismissal, the Government now needs to

Terry Scuoler, chief executive, EEF
Terry Scuoler, chief executive, EEF

take a full review of the evidence before reaching any conclusions. But this must not detract from pushing forward on other areas of urgent employment reforms, where the evidence and support for change is already much clearer.”
Richard Bridgman, chairman Warren Services, Semta chair for East of England
“I would support all five recommendations that I’ve seen, but not some of the silly ones mentioned on the news and in the papers.”

Richard Bridgman, chairman, Warren Services

Richard Bridgman, Warren Services
Richard Bridgman, Warren Services

“I would support all five recommendations that I’ve seen, but not some of the silly ones mentioned on the news and in the papers.”

Angela Coleshill, director of competitiveness, Food & Drink Federation
“We responded to the various calls for evidence on these issues earlier this year and are encouraged by the start the government has made. The challenge of course will be the implementation of future change.

Angela Coleshill, Food & Drink Federation
Angela Coleshill, Food & Drink Federation

“Regarding the Compensated no-fault dismissal, we know that this is a controversial area and recognise that the government has a lot to do in reviewing feedback from business and stakeholders; the call for evidence itself does not close until June. We are currently in the process of working with our members to develop our position. Initial soundings seem to indicate that there are many issues to consider in detail before this idea can become a reality.”
David Blanchflower, labour market economist, speaking to the BBC
“Positively, in the UK we’ve seen incredibly flexible wages and hours./ No evidence that regulation is a problem whatsoever. The BIS survey of 2011 itslef said that just seven per cent of firms said regulation was a problem.”

The view from over there: Denmark

Kristine Lund, a Danish employee of The Manufacturer

“In Denmark, Fleksjob ordning is an employment scheme designed for people who cannot hold a full-time job under normal working terms, perhaps through illness.

Kristine Lund Walsh
Kristine Lund Walsh from Denmark

“For general unemployment, if you have been unemployed for six-months, you can find a company who will take you on for a month for no pay (either you find the company yourself or the job centre will recommend you to some companies who will be willing to take you on).

If the company wants to keep you on, they can then employ you for six months where some of your salary is paid by the government in a scheme called løntilskud (‘good for all three parts’). The company has one more staff but not paying full salary and the government gets people out into work.

After six months, it is up to the company if they want to keep you on, under normal terms, normal pay and so on, but there is no obligation to do so.”