Proposals to make it easier for companies to hire and fire people to help promote growth have split the coalition government, especially over the controversial no-fault dismissal recommendation.
A report commissioned by Downing Street published yesterday (Monday) has said that, in order to get economic growth going, firms should be able to sack workers without saying why.
The no-fault dismissal is one of 17 proposals in the Report on Employment Law by Adrian Beecroft for firms to opt out of regulations which are seen to be holding back risk-taking and investment.
Business Secretary Vince Cable dismissed the unfair dismissal plans as “nonsense”, even though his department are looking at the idea, especially for small firms.
“British workers are very cooperative and flexible. We don’t need to scare the wits out of them with threats of dismissal, it’s completely the wrong approach,” he told the BBC as a visit to the reopened Redcar steelworks.
Damian Collins, a Conservative MP with experience of running a business, approved the measures, saying that labour laws have to be flexible. “We want companies to take people on and be unafraid of the consequences of taking people on. We need to get the balance right with employee rights but the Beecroft report is an important step on the road to considering all options for labour market reform.”
The report’s other recommendations include: reform of unfair dismissal; giving employees less warning of large redundancy plans; a cap on tribunal payouts; changes to pension contributions; flexible leave; equal pay audits and discrimination legislation.
It proposes exempting small firms especially from a swathe of regulations.
Industry bodies supported the bulk of proposals for employment reform, but were generally sanguine about the no-fault dismissal proposal. “There are many proposals within the report which industry will support, such as reform of Employment Tribunals and collective redundancy rules and the need to minimise the red tape around any extension of flexible working,” said manufacturing body EEF’s chief executive, Terry Scuoler.
“In other areas such as Compensated no-fault dismissal, the Government now needs to 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.”
Commentators pointed out that there was little correlation between the volume of business regulation and a country’s economic growth. Speaking on the BBC’s Newsnight, Stephen Blanchflower, ex-member of the Monetary Policy Committee, said that some countries with the most employment regulation, such as Turkey, have recorded the highest growth. He and other commentators said the key factor to stimulate growth that the report ignores is access to finance for small and medium businesses.
The controversial report was the subject of a BBC Newsnight debate last night, click here for the iPlayer link.
Downing Street denies report doctoring
The Daily Telegraph reported today that a document leaked to the newspaper showed that three proposals in the controversial Beecroft report were removed after being submitted to Downing Street before it was sent to the Business Department.
Following the leak, Downing Street has dismissed a Labour suggestion that it “doctored” the report on employment law reform to avoid embarrassment. Amending the original version would suggest that the Prime Minister, who has been criticised for advocating overly “family-friendly” employment laws like parental leave, had softened some of the harder recommendations.
