The Chancellor has called for an investigation into the benefits of 'no fault dismissals' for smaller employers. Last year the leaked Beecroft report put the idea of no fault dismissals out onto the table. It created a lot of intense debate. However, the Government continues to believe that the way to get the economy moving is to improve employment law for employers, in particular, smaller employers by lessening the burden on them of perceived “red tape”.  They believe that by reducing the amount of regulation surrounding the  employment of individuals will encourage employers to expand and accordingly to employ more staff.

Speaking at a dinner for manufacturing organisation EEF, George Osborne urged small employers to submit evidence as to how an introduction of a no fault dismissal system would encourage them to expand and employ more staff. He pointed out that there were many against the idea and it was clear that those people would definitely submit their evidence as to why not to introduce such a scheme. In his attempt to persuade employers to submit evidence in support of the scheme he pointed out that whilst employees have a right to be protected so too do employers have a right to be protected against being “sued out of existence”.

This idea of being sued out of existence has angered some employment professionals. They argue that an employer will only be sued if it has not treated its employees fairly. As such, this kind of scheme would only benefit the worst employers who do not have the rights of their employees close to heart. It is acknowledged that employers are perhaps more scared than ever of 'vexatious' claims being brought to Tribunal, however, that is one of the reasons why the Government introduced Tribunal fees even though these too, were hotly debated.

The standard to reach for a dismissal to be deemed unfair is that the action of the employer was not within a range of reasonable responses to whatever it was that caused the dismissal. This provides employees with protection but at the same time prevents vexatious claims in itself, without the need for Tribunal fees, some would add. By this logic, therefore, the Government could be seen to be aiding employers to act unreasonably and unfairly towards their employees if no fault dismissals are introduced. The Government might however then argue that this would only be available for the smallest employers and that the overall effect on the employment sector and the economy would make it worth it.

Those against the idea that smaller employers be given numerous concessions in relation to employment regulation, would point out the different avenues of support available to those without dedicated HR departments. For example, ACAS offer comprehensive guidance on how to ensure a dismissal is fair. Those taking on the responsibility of employing staff should be able to follow this guidance and avoid any issues. At the moment the Chancellor has just announced a call for evidence as opposed to a full consultation. Depending on the response he receives there may be room for a no fault dismissal after all.