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Posted by on in Dismissal
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CIPD warns against compensated no-fault dismissals

Government plans to enable micro firms to dismiss employees without good reason risks creating a perverse barrier to economic growth by discouraging small businesses from hiring more workers.

This is the view of the Chartered Institute of Personnel and Development (CIPD) in response to the call for evidence by the Department for Business, Innovation and Skills on proposals to introduce compensated no fault dismissals for firms with fewer than ten employees.

Under a system of compensated no-fault dismissals, businesses with fewer than ten employees (known as micro businesses) would be able to dismiss a worker, where no fault had been identified on the part of the employee, with the payment of a set amount of compensation.

Mike Emmott, employee relations public policy adviser at the CIPD, said:

“There is no economic case to be made for the watering down of employment rights for businesses of any size. Businesses have far more to lose in lost productivity from a de-motivated and disengaged workforce than they stand to gain from the ability to hire and fire at will. The consequences for the UK’s economic growth could prove particularly perverse when it comes to micro-businesses, who may be discouraged from hiring their tenth worker and may even struggle to recruit high calibre employees because they are seen as low-road employers.”

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