Tuesday, 27 March 2012

Whose fault is it anyway?

The department for Business, Innovation and Skills (BIS) has issued a "call for evidence" in relation to two sets of proposals:

1) The simplification of the ACAS Code of Practice on Discipline and Grievance, to make it easier for smaller employers to comply

2) The introduction of "compensated no fault dismissals" for micro-businesses (those with fewer than 10 employees)

The revision of the ACAS Code as it applies to small employers would clearly be welcomed.  Some of the code's provisions are particularly onerous for small businesses, such as the requirement that different people undertake the roles of conducting an  investigation and holding a disciplinary hearing.  Although it is the case that no single provision of the code is legally binding in itself, and Tribunals are required to take into account the size and administrative resources of an employer in determining whether a failure to follow an aspect of the code is reasonable, a revision of the code for small employers would remove the uncertainty over what any particular Tribunal will deem to be fair in the circumstances.

The benefits of "compensated no-fault dismissals" are far less clear.  Employers can already make use of the recognised tool of Compromise Agreements to bring a "mutually agreed" end to an employment relationship.  Whilst "compensated no fault dismissals" may allow employers to terminate a relationship without agreement, and would avoid the legalities (and legal costs) associated with drawing up a Compromise Agreement, they will only prevent employees bringing unfair dismissal claims.  Other types of claims, most notably unlawful discrimination, which can be incorporated into a Compromise Agreement, will not be covered under the "compensated no fault dismissal".  As the government has already committed to radically simplifying the use of Compromise Agreements (possibly including the issuing of a "standard" agreement and guidance which we are sure many employers will welcome) it is questionable whether "compensated no fault dismissals" will offer any real advantages to small employers.  Any potential advantages  are likely to be outweighed by the increased legal wrangling which is likely to ensue, not least arguments over the number of "employees" a company has.  It could be the case that any such provision increases the Tribunal burden rather than reducing it.

The link to read the proposals and submit views is BIS, Call for evidence: Dealing with dismissal and “compensated no-fault dismissal” for micro businesses, March 2012 l

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