by Claire Singleton, of asb law

The government recently asked employers, employees and other interested parties to comment on a proposal to introduce "no fault" dismissals for businesses with fewer than 10 employees.

The reasoning is dismissal processes are too complex, smaller businesses do not have HR or legal teams, and when a staff member "doesn't quite fit" or "the relationship has irretrievably broken down" there should be an easier way for these businesses to part company with their employees.

The thinking goes this would encourage businesses to grow as they'd be less concerned about the costs of dismissing staff.

While the owners of small businesses might welcome this as an attractive proposal, it does raise a number of questions.

If the aim is to encourage the growth of businesses and the creation of new jobs, is this going to be undermined if businesses try to avoid reaching the magic number of 10 employees?

This is also a very low cut off point if one reason for the measure is the lack of HR or legal team. Many businesses with much larger workforces do not have dedicated HR let alone legal teams; even businesses with up to 200 or so employees may not have in-house HR expertise, often relying either on the Finance Director or the Managing Director's PA to deal with 'people' issues, with or without external assistance.

In a period of high unemployment, it may be easier for small businesses to recruit high-quality staff, but as and when the economy picks up would they want to stay with a business when they know that they could be dismissed for no reason at any time?

The success and growth of small businesses is often due to the dedication and enthusiasm of loyal staff; will they maintain that enthusiasm and loyalty if their employment is so insecure? Might we create a two-tier workforce with employees who have no option but to work for small businesses having a lower level of protection, and is this really going to promote growth and job creation?

The proposal is in a no-fault dismissal, the employer would pay the employee set compensation. However, this payment would not necessarily protect the employer from claims. Much of our anti-discrimination law stems from Europe, so the no-fault dismissal scheme cannot be set up to prevent employees claiming discrimination.

Consider a situation in small businesses that arises when an employee goes on maternity or long term sick leave. During their absence someone is taken on to cover the role and is found to be better than the original employee, or jobs are rearranged so the business copes with one fewer member of staff.

Either way, when the employee is ready to return, the employer wants to terminate their employment. The no fault dismissal would not protect the employer.

And is it so difficult even for small businesses to conduct a fair dismissal process? It's rather patronising to assume an employer with fewer than 10 employees is unable to understand and apply basic principles of fairness.

It will be interesting to see what the response to this proposal will be. If you want your voice to be heard in the debate, make sure you respond to the request for evidence before the closing date of June 8, 2012.

Contact Claire Singleton on 01622 656500 or email claire.singleton@asb-law.com.