Employment Law Birmingham News

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.”

Workplace relations body Acas has called for more employers to consider using mediation at work to help resolve disputes and avoid potentially costly and stressful employment tribunal claims. The call comes after a study carried out by Acas in 2011 found that just 5% of employers have used mediation to solve a workplace dispute.

The study also revealed that despite low take up by employers, 64% were aware of mediation, and around three quarters of businesses agreed that mediation is a good tool for resolving disputes at work, with half agreeing that mediation produces "win-win" solutions that leave both parties satisfied.

Andrew Wareing. Director of the Acas service responsible for resolving disputes between individuals and their employers, said:

"Workplace conflict can damage an organisation's effectiveness. Last week's announcement that the Government is funding a pilot scheme for two regional mediation networks will help raise awareness among employers about how mediation can help benefit their business.

“Mediation helps resolve disputes quickly and effectively, minimising distress and cost as well as preserving workplace relationships. Acas successfully resolved 90% of the mediation cases we were involved in over the last year alone."