Should it be easier to fire workers?

In the draft legislation being set out by Vince Cable, the government is aiming to unburden business from onerous dismissal costs and red tape to encourage firms to hire more staff.

The key components of the bill are:

– proposals to change so-called settlement agreements where employees may waive some of their statutory rights such as in the case of facing dismissal where a worker may be offered a payment in return for agreeing not to take the case to an employment tribunal.

Currently such agreements are not binding unless independent advice has been taken by the employee. The government wants to make the agreements binding with or without the employee having taken independent legal advice.

– plans to limit the amount of money which can be paid out for unfair dismissal from its current level of £72,300 to a level more commensurate with for example, average annual salaries (which are £25,882). The government says the average unfair dismissal payout is less than £5,000.

An underlying assumption in these proposals is that employers all act reasonably. We see day in and day out that employers do not always act reasonably, especially when there is money to be saved. Edward Cooper

– To encourage firms and workers to settle employment disagreements without recourse to a tribunal.

The proposal put forward in the Beecroft Review of so-called “no-fault dismissals”, ie employers could effectively fire workers at will, has been abandoned by the government.

Edward Cooper, national practice group leader at RJW Slater Gordon (a firm which has represented whistleblowers) and Mark Mansell (employment partner at Allen & Overy (who largely represents employers), told Channel 4 News what they think of the reforms.

Edward Cooper

“The changes provide a potential charter for poor employment practice. If the compensation claims are reduced radically, that acts as a disincentive for employers to act appropriately to the disadvantage of employees. “

“An underlying assumption in these proposals is that employers all act reasonably. We see day in and day out that employers do not always act reasonably, especially when there is money to be saved.”

I personally think the insertion of a short cooling off period would be a good idea. Mark Mansell

“The argument of the government is that in making it easier to reach resolution on termination of employment you encourage employers to recruit when perhaps that they wouldn’t have done otherwise. First of all there is no evidence that that would happen, it’s a smokescreen for an erosion of employment rights. Secondly, it may also mean there is a lack of enthusiasm for those currently in jobs to move job.”

“There must be a risk that any potential whistleblower will feel less secure because of this. When someone does blow the whistle, another reason is too often found to apply pressure for that person to move on. The purpose of the whistleblowing legislation is to change the culture, not to generate claims for employees. If you have a culture where you reduce employees’ rights, employees may well be far less willing to raise issues of illegality, unlawful conduct and bad practice.”

Mark Mansell

“Do I think it’s a good idea for people to be able to sign off without a lawyer being involved? Yes I do. “

“I think if you take a step back there’s always a balance that has to be struck between making sure that employers have the flexibility that they need, but also to protect employees, particularly the most vulnerable employees.

“In the US they have a cooling-off period so you can change your mind about signing a waiver within seven days and it means that people aren’t signing away their rights without knowing what they are doing. I personally think the insertion of a short cooling off period would be a good idea. It would realise the government’s idea of de-lawyering the process while protecting employees. To my mind that would be a much better way of doing it.”

“Streamlining employment tribunals, that would be fantastic. It’s become too legalistic. If we could get back to a simpler process, that would benefit everyone and allowing tribunals themselves to take more control would be very good.”