Is Vince right on dismissal and settlement agreements?

Before I really get into this, I do think it’s important to acknowledge that had the Tories been governing alone, they would have cheerfully implemented the Beecroft Report which basically gives employers the right to hire and fire at will. How keeping employees in constant fear of their jobs actually contributes to good long-term performance is beyond me. Liberal Democrats may only be 20% of the Government, but we’ve stopped some really nasty Tory policies happening.

However, it was with a heavy heart that I saw Vince Cable defend plans to restrict employees’ compensation and encourage settlement agreements to end the employment relationship. I feel that employers already have enough power in this regard.

The Government is sending out too many messages about health and safety and employment rights that give employers the impression that they have carte blanche to treat employees badly. The Government has already more than doubled the time, from 3 days to 7, that an employee can be off work following an accident before it has to be reported to the Health and Safety Executive. As of 6 April this year, an employee has to have two years’ service before they can seek recourse to an employment tribunal if they are unfairly dismissed.

The Tories have an interest in helping their rich friends reduce the costs of employing people, but we don’t. We have always been on the side of the ordinary worker, wanting to free them from exploitation by both management and unions. We see people as individuals, not some collective hive minded blob.

When I shared the BBC story about Vince’s latest proposals and my concerns on Facebook the other day, quite a big debate developed. What Vince wants to do is to bring in settlement agreements, which enable staff to leave with some compensation and without then being able to go to a Tribunal. He also wants to cut the maximum amount of compensation Tribunals can award to 12 months’ salary.

When Beecroft’s report was about to be published last year, Channel 4 took to task his claims that there was too much red tape surrounding employment in this country and found them to be wanting. They found that claims that British workers were comparatively easy to sack  to be quite right.

It surely isn’t too much to ask for an employer to adhere to relatively few legislative requirements. When they take someone on, they have to check they are allowed to work in this country, set up their payroll and give them a contract which states their terms and conditions of employment. It’s hardly too much to ask. It’s employers who adopt a slapdash approach to this who are most likely to fall foul of an employment tribunal. If they can demonstrate that they followed the relevant procedures, they are in a pretty good position to win. They can sack people if they have enough evidence to do so. And if they realise that they have recruited the wrong person, they now have two years in which they can dismiss them without the threat of a tribunal.

What about a relationship that breaks down after the two year point, though? Career patterns are such that young people are being prepared to have upwards of 30 jobs during their careers. My husband, who is approaching retirement, has had 3 jobs in his whole career. The number of people who get to that two year qualifying point may well drop in years to come. For now, though, what do you do if an employee is actively harming the organisation through poor performance?

Going back to the debate on Facebook, the respondents were pretty much split down the middle on this, with people I respect on both sides of the argument. That’s always a good sign to me that things aren’t particularly clear cut. There were tales of how difficult it had been as an employee to be fairly treated by their employee. Another said that as an employer, a good employer who treats staff well, there were still instances where people would threaten a tribunal even if there was no case to answer and employers would end up settling just to avoid the hassle and legal costs. There is therefore an argument that allowing the settlement agreements formalises this process and takes at least some of the stress, expenses and recrimination out of the situation.

On the other hand, though, it could be used as an intimidatory weapon by an unscrupulous employer. They can threaten the employee that they would seek legal costs if the employer won a Tribunal case – up to £10,000. It used to be £500 but that limit was raised by Labour. Don’t ever let anyone tell you that New Labour championed workers’ rights. Employment Tribunals hardly ever award costs and only tend to do so if one side or the other has behaved unreasonably or vexatiously. We’re looking at under 60 costs awards out of 186,300 cases. I worry that employers would urge settlement when they are clearly in breach of the law and would effectively get away without penalty when the employee would have a chance of winning.

There’s no way it should be easy for employers to sack people. Taking away someone’s livelihood is really serious stuff and shouldn’t be done without proper process. There are already substantial provisions for fair dismissal within the law. Even an unresolvable personality clash can count as reason for fair dismissal, according to the Government’s own website.

I don’t think the amounts a Tribunal can award should be anything less than punitive. If an employer has been found to have behaved badly, then they should have to pay adequate compensation, particularly if their actions have compromised the position of the employee in their future employment. 

My gut instinct is that what Vince is proposing is an unwelcome change and sends the wrong message to employees. However, I see that there is a counter argument that he’s adding to the cultural mood music without actually changing many of the defining principles in the law. Settlement agreements already exist. Vince may well be talking more talk than he is walking walk. It may not be as clear cut as  it initially appears.

Happily, though, it’s not a done deal yet. These proposals are up for consultation, and you can have your own say here until 23 November. What’s your take on it all?

About caronlindsay

Scottish Lib Dem internationalist, mum, LGBT+ ally, Doctor Who, Strictly, F1 and trashy tv addict and blogger. Servant to two spaniels. She/her.
This entry was posted in Employment law, Employment Tribunals, Vince Cable. Bookmark the permalink.

2 Responses to Is Vince right on dismissal and settlement agreements?

  1. KelvinKid says:

    Congratulations on a post that gets to the heart of the matter. As your link to Fact Check demonstrates the UK scheme of employment protection is already the third most laissez-faire in the world and there is no majority of the business community demanding that legislation be changed in the way Cable is proposing. There is no economic case for 'reform' either.

    An employee who feels they have been unfiarly dismissed already faces a number of formidable barriers to bringing a case before an employment tribunal, primarily the complicated bureaucracy, the need for specialised legal help and the associated costs.

    The legal requirements of dismissing an employee fairly are not onerous, indeed they largely amount to a codification of good personnel practice.

    The proposed capping of already restricted awards makes a mockery of compensating the employee fairly for an employer decision that can have shattering consequences. Restricting tribunal awards to one year's salary or median earnings whichever is the smaller means that there is no recognition of the potential long-term affects of dismissal on a complainant and that higher-paid employees are paid sums that are negligible in comparison to their losses.

    I feel strongly that a Liberal Democrat minister should be playing no part in diminishing individual rights in this manner.

    Like

  2. KelvinKid says:

    Congratulations on a post that gets to the heart of the matter. As your link to Fact Check demonstrates the UK scheme of employment protection is already the third most laissez-faire in the world and there is no majority of the business community demanding that legislation be changed in the way Cable is proposing. There is no economic case for 'reform' either.

    An employee who feels they have been unfiarly dismissed already faces a number of formidable barriers to bringing a case before an employment tribunal, primarily the complicated bureaucracy, the need for specialised legal help and the associated costs.

    The legal requirements of dismissing an employee fairly are not onerous, indeed they largely amount to a codification of good personnel practice.

    The proposed capping of already restricted awards makes a mockery of compensating the employee fairly for an employer decision that can have shattering consequences. Restricting tribunal awards to one year's salary or median earnings whichever is the smaller means that there is no recognition of the potential long-term affects of dismissal on a complainant and that higher-paid employees are paid sums that are negligible in comparison to their losses.

    I feel strongly that a Liberal Democrat minister should be playing no part in diminishing individual rights in this manner.

    Like

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