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27 October 2011 0 Comments
Posted in Employment, Opinion

How “Fair” is Unfair Dismissal?

Posted by , Partner

So we read today that the government has commissioned a report which apparently concludes that the Unfair Dismissal legislation is not fit for purpose and should be abolished.

Seemingly the recovery of the British economy is being significantly hindered by lazy workers coasting along and immune from dismissal because their employers fear the cost of employment tribunal claims.

Presumably the report is based on careful analysis of significant statistical and empirical evidence. Without having the chance review this it would be wrong to be damning of its apparent conclusions. However, at first blush, it seems a quite extraordinary diversionary tactic. The unfair dismissal legislation has been with us for some 40 years. This span of time has seen at least three recessions and many difficult economic conditions as well, of course, as “boom” times. But there has not previously been any serious suggestion that the unfair dismissal laws should be repealed. Perhaps the apparent inability of business to drive the recovery from recession has caused people to cast around for explanations other than the obvious.

Coming from the perspective of a practising employment lawyer it is undoubtedly true that the employment tribunal system and employment law generally (not specifically unfair dismissal) can be abused by undeserving employees with comparatively hopeless cases. Unfortunately I cannot imagine that these examples will disappear if the unfair dismissal laws are removed. Royds has had to defend employers against such claims on many occasions over the years and I am hard pressed to think of any which did not also include an allegation of discrimination or perhaps whistleblowing – so these cases would have been pursued in exactly the same way whether or not there was a right of protection against unfair dismissal.

It is also wrong to think that pursuing an employment tribunal claim is a guaranteed free ride. The government has recently announced an intention to charge a substantial fee (£250) for the commencement of every claim plus an even more substantial one (£1000) when a hearing date is fixed. Although this regime does not start until April next year, even now employment tribunals can make employees bringing unmeritorious claims pay a substantial contribution towards the employers legal costs. Many employers use this as a real threat to pressurise employees into dropping their claims.

It is also difficult to understand why employers are struggling under the burden of “lazy” staff. Unfair dismissal protection does not even commence for 12 months – and the government has also announced that, again with effect from April 2012, this will increase to 24 months. You might think that two years is long enough for anyone to decide whether a worker is a valuable asset or not. Is it really the case that British industry is chock-full of employees who have performed well for a year or two but have then become clock watching timeservers? It hardly seems likely.

And do we really want a US style “at will” employment regime under which in theory employees can be “let go” overnight with no compensation? After family and a home, a job is surely the most important component of most people’s lives. On the back of a belief in secure employment people undertake many commitments- mortgage/rent; starting a family; purchasing a car and household goods; holidays and so on. Job security is what underpins these decisions.

Indeed if you look at the comparative economic success of Germany and France during this latest recession there is perhaps an argument for adopting their even more restrictive employment practices!

Where in our experience there does seem to be more of a problem (and seemingly this is acknowledged in the government report) is in the public sector or areas (such as large charities) which operate in a very similar way. Here our experience at least would suggest that management can become frozen in the headlights of employment protection legislation and feel unable to do anything at all to correct unacceptable performance. Fearing workplace procedures lasting months followed by internal appeals and then inevitable employment tribunal claims (often supported by trade unions) it is perhaps understandable that employers opt for the quiet life and put up with the problem.

In our view the right response to this issue is to do the exact opposite. Robust early action as soon as performance begins to become unacceptable;  followed up consistently in a process of clear and open dialogue with the employee; and, if there is still no improvement,  then dismissal will typically be endorsed as an acceptable approach by the employment tribunals. Yes of course there will still be a cost (in terms of management time and legal fees) but employers often find that adopting this sort of approach is very beneficial in deterring other employees from a similar course of action.

Like it or not our caseloads (and those of the employment tribunal’s) are replete with examples of sometimes quite atrocious behaviour by employers. We also work with many employers who are aware that they should have done something about underperforming staff much earlier but now wish to make an immediate change. With the right advice this is almost always achievable without the employment tribunal becoming involved.

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