The Government is proposing to introduce 'compensated no-fault dismissals' for micro-businesses with fewer than 10 employees. The thinking is that dismissing someone can be a daunting and complex process for small employers.
Under the plan, they would be able to dismiss a member of staff simply by paying a set amount of compensation, without following a formal dismissal procedure or identifying any fault on the employee's part. The individual would be prevented from bringing a tribunal claim for unfair dismissal (although not other types of claim, such as discrimination).
This is controversial stuff, but it is worth exploring - and not just with regard to small employers.
Unfair dismissal law is wildly uncertain and unpredictable, frequently triggering lengthy and expensive tribunal litigation. An alternative system requiring employers to pay fixed 'indemnity' compensation on dismissal, unless an employee is guilty of serious misconduct, merits serious consideration. But its success would depend on setting payments at a sufficient level to deter employers from sacking arbitrarily and encourage them to manage potential terminations effectively and fairly.
Michael Burd and James Davies, Lewis Silkin LLP solicitors, email: firstname.lastname@example.org