Latest Public Sector News

15.03.12

No-fault dismissal proposals criticised

Government plans to enable microfirms to dismiss employees without good reason risks creating demotivated workforces and a perverse incentive for firms not to expand, the Chartered Institute of Personnel and Development (CIPD) suggests.

This warning comes in response to the BIS call for evidence on the proposals to introduce compensated no-fault dismissals in small businesses.

Under a system of compensated no-fault dismissals, businesses with fewer than ten employees 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 theUK’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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