Policy Response

Dealing with dismissal and compensated no-fault dismissal for micro-businesses

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Dealing with dismissal and compensated no-fault dismissal for micro-businesses

Published June 2012

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In June 2012, the CIPD responded to the Department for Business, Innovation and Skills’ consultation on reforming dismissal rules and introducing Compensating No-Fault Dismissal for micro-businesses.  The consultation sought views from individuals and organisations on the possibility of introducing a system whereby an employer could dismiss a worker where no fault had been identified on the part of the worker, by paying them a set amount of money.

We do not believe that a ‘deregulation drive’ will lead to employers creating more jobs, thus stimulating economic growth.  The UK is already the third least-regulated labour market in the OECD.  It is important to maintain that labour market flexibility to ensure we remain competitive on the global stage, but this does not amount to the need for a wholesale stripping of employment rights and protections.  We believe that employment regulation should be a last resort and applied in as light-touch a way as possible, in order to meet its stated aims at minimum administrative cost.

We do not agree with the idea of compensated no-fault dismissal for micro-businesses.  We are concerned about the implication that employers would technically be able to remove an employee whose ‘face does not fit’, which entirely contravenes good employment practice.  Moreover, we do not believe that these proposals would offer employers any significant additional benefit when they can currently use compromise agreements to much the same ends.

Similarly, we do not believe that the disciplinary steps set out in the Acas Code of Practice to be unduly burdensome and thus oppose the idea that these should be changed for micro-businesses.  However, we believe that smaller employers may benefit from having access to step-by-step guidance on good employment practice.