Labour Research November 2012

Law Matters

Micro-business U-turn

The government has dropped its proposal for “compensated no-fault dismissals” after it failed to get support from any of the business lobby other than the Institute of Directors.

The government was considering permitting micro-businesses — organisations with 10 employees or less — to terminate an individual’s employment by simply making a small pay-off — a system known as “compensated no-fault dismissals”.

However, in its response to a consultation, the government has conceded that there is insufficient evidence that such pay-offs would have a positive impact on the UK labour market.

The government will be asking the conciliation service Acas to amend its Code of Practice on disciplinary and grievance procedures. The government believes that performance and disciplinary procedures could be better distinguished and clarified.

In addition, the government wants guidance to the Code to be amended to state that companions at an internal hearing are able to answer questions on behalf of the worker who is the subject of the hearing, though employers will be able to insist that the worker answer instead.

Additionally, the government intends to introduce simplified guidance targeted at small businesses. It wants this guidance to reflect its view that some employee actions or failings will have a more serious impact on small businesses and so will justify such an employer reacting more strongly or quickly than a larger employer.