The recent news that Business Secretary Vince Cable is mulling a reform package for Britain’s labour legislation can be seen as quite welcome. The country as a whole is mired in outdated worker laws that are adversely affecting the economy, and so reviewing and revising these statutes is necessary. Among Cable’s proposals are to introduce a revised code for employment arbiters Acas to follow, seeking to reduce the compensation cap on unfair dismissal claims, and an attempt to make it easier for judges presiding over employment tribunals to dismiss cases on their merits. Most reasonable people would agree that these measures are needed.
The current state of labour laws in the UK strangles small businesses with excessive protections for workers, making it extremely difficult to dismiss unsatisfactory employees. The overall result has been sluggish hiring statistics when the one thing the country could use is an uptick in employment. While no one denies that workers’ rights must be protected, the current state of labour law goes too far. Businesses are simply afraid to add staff for fear that they will never be able to get rid of them, no matter how incompetent they might turn out to be. Obviously, the unions and other labour forces are opposed to these suggested revisions of current law. They fear that even the modest reductions in unfair dismissal awards and easing the rules that judges must follow in these cases will be detrimental to the fortunes of workers. However, one must consider that labour unions oppose any suggested change in the law that has the potential to reduce workers’ leverage.
As usual the most necessary reform is the least popular: We should reconsider Adrian Beecroft’s suggestions and implement At-Will employment on the American model – modified, certainly, but essentially similar in concept.
This, of course, generates howls of protest whenever it’s mooted, but let’s stay reasonable: The belief seems to be that implementing At-Will employment will immediately result in chaos as companies and small businesses punitively sack employees without repercussion. Wages will drop likes stones, unemployment will soar, and, in the favoured phrase of the unions, workers’ rights will be set back centuries.
None of this will happen, of course. All one must do is examine the American labour market to see that At-Will employment is not a draconian anti-labour measure but simply a reasonable approach to the employer-employee relationship. Protections can still be in place – it is absolutely incorrect that the American model allows employers to fire people at any time for any reason; there are, in fact, a host of local and federal laws governing dismissal and protecting the rights of workers. But allowing the labour market itself to govern hiring and firing more freely has many advantages.
One, it would actually encourage businesses to hire more workers. With the security of knowing they can terminate unsatisfactory employees for reason without fear of expensive and time-consuming tribunals, they will have little reason not to expand their work force. At this time in history the economy could use the energy this would immediately generate. And workers should consider how often they may have lost a position they were qualified for because an unqualified worker could not easily be removed from their post.
Second, it would reduce the cost and unwieldy bureaucracy of the employment tribunal system. Having a version of this system remains necessary, of course, to deal with legitimate cases of unfair dismissal or illegal practices by employers, but eliminating the nearly-automatic claims that occur any time an employee in England is sacked would naturally reduce the necessary size and budget of the entire apparatus. Again, at this moment in the country’s economic history, this budget reduction would be quite welcome.
The key is to stress that employee protections would remain, and possibly increase in some areas. unfair dismissal would still be punished effectively, but At-Will reform would in fact allow fair dismissals to proceed much more easily, benefiting everyone. It isn’t a popular position, but it’s one that needs to be considered, and soon.
Mark Darcey is the owner of an independently owned commercial debt recovery company based in the UK.