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I’m a Barrister at Atlantic Chambers looking at various aspects of Employment Law including new developments in case law and legislation.

Adrian Beecroft and Proposed Reform to the Law of Unfair Dismissal

From April 2012, for employees to claim unfair dismissal they will, in most  cases, need at least two years’ qualifying service with their employer.  The Government are also considering whether to introduce fees for those who wish to present Employment Tribunal claims.

Most concerningly, we have recently learned from the Telegraph of a leaked report from Adrian Beecroft, a ‘venture capitalist and Conservative Party donor’, commissioned by the Prime Minister, in which Mr Beecroft cited ‘the terrible impact of the current unfair dismissal rules on the efficiency and hence competitiveness of our businesses, and on the effectiveness and cost of our public services’.

A recent blog post by flipchartrick highlighted the lack of empirical evidence to suggest that the law of unfair dismissal is or has been detrimental to the United Kingdom economy.  Rick points out that the Federation of European Employers regards the UK as operating ‘a highly liberal labour market with the minimum of legislative intervention’.  Rick highlights that Switzerland, the most competitive economy in the world, provides workers with ‘almost watertight’ protection after three months and that the Swiss government requires permits for Sunday working.

The Telegraph tells us that Beecroft argues, ‘The rules both make it difficult to prove that someone deserves to be dismissed, and demand a process for doing so which is so lengthy and complex that it is hard to implement.  This makes it too easy for employees to claim they have been unfairly treated and to gain significant compensation’.

It is worth considering what the present law of unfair dismissal requires from an employer, in order for a dismissal to be fair.

It requires an employer to show a fair reason for dismissal.  If the reason for dismissal is misconduct, for example, the employer should have carried out a reasonable investigation, have reasonable grounds to believe in the employee’s guilt and actually believe in the employee’s guilt.  The employer has some leeway; if an employer genuinely believes that one of a group of employees is guilty of the misconduct in question, but cannot identify the individual from the group, the employer can fairly dismiss all employees in the group.  For example in Monie v Coral Racing [1980] ICR 109, where two employees had access to a safe and the employer discovered a substantial sum of money missing, but had no way of knowing who stole the money, the Court of Appeal upheld the Employment Tribunal’s decision that the dismissals of both employees were fair.

As developed in the case of Iceland Frozen Foods Ltd v Jones [1982] IRLR 439 (EAT) the employer’s decision in respect of dismissal only need to be within a ‘band of reasonable responses’.  Only if the dismissal falls outside of the band of reasonable responses can the dismissal be held to be unfair by an Employment Tribunal.  A harsh decision can still be fair; even if another employer may not have dismissed the employee in the circumstances the dismissal can still be fair.  The Employment Tribunal are not permitted to substitute their own views as to the right course the employer should have adopted.

In respect of Beecroft’s apparent claim that the process in respect of dismissal, ‘is so lengthy and complex that it is hard to implement’, it should be noted that there is no longer any minimum procedure which an employer needs to follow in dismissing an employee, following 6th April 2009 and the repeal of the statutory disciplinary and grievance procedures.  Although ACAS have introduced a Code of Practice on Disciplinary and Grievance Procedures the requirements of the Code are modest, requiring a reasonable investigation, disciplinary hearing and the right to appeal.  Non-compliance with the Code will not result in an automatically unfair dismissal, albeit an Employment Tribunal ‘may’ (but are not compelled to) adjust a successful employee’s award by up to 25% for any unreasonable failure to comply with the Code, under Section 207A of the Trade Union and Labour Relations (Consolidation) Act 1992.

It is also worth pointing out, that out of the relatively small number of unfair dismissal claims which proceed to hearing (some 9,000 per year based on the latest statistics), more than half of these claims are decided in the employer’s favour.

The law of unfair dismissal in the UK was first implemented by a Conservative Government in the form of the Industrial Relations Act 1971, following The Report of the Royal Commission on Trade Unions and Employers’ Associations 1965-1968 (Cmnd) 3623), more commonly known as the Donovan Report.

When employment protection and particularly the right not to be unfairly dismissed appears under fire from all quarters and the Government is apparently contemplating significant regressive changes, it serves to consider precisely why statutory employment protection in respect of dismissal was implemented.  The Donovan Report stated:

 

526.  We share in full the belief that the present situation is unsatisfactory.  In practice there is usually no comparison between the consequences for an employer if an employee terminates the contract of employment and those which will ensue for an employee if he is dismissed.  In reality people build much of their lives around their jobs.  Their incomes and prospects for the future are inevitably founded in the expectation that their jobs will continue.  For workers in many situations dismissal is a disaster.  For some workers it may make inevitable the breaking up of a community and the uprooting of homes and families.  Others, and particularly older workers, may be faced with the greatest difficulty in getting work at all.  The statutory provision for redundancy goes some way to recognise what is really at stake for an employee when his job is involved, but it is no less at stake if he is being dismissed for alleged incompetence or for misconduct than if he is being dismissed for redundancy.  To this it is no answer that good employers will dismiss employees only if they have no alternative.  Not all employers are good employers.  Even if the employer’s intentions are good, is it certain his subordinates’ intentions are always also good?  And even when all concerned in management act in good faith, are they always necessarily right?  Should their view of the case automatically prevail over the employee’s?

This compelling summary as to the importance of unfair dismissal protection remains as apt in 2011 as it did in 1968.

Contrary to that apparently concluded within the leaked Beecroft report, the present law of unfair dismissal provides only relatively modest employment protection.  Any downgrading of unfair dismissal rights is likely to amount to an unwarranted and ineffective retrograde step with a significant negative impact on the UK’s employees.

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