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CIPD welcomes death of no-fault dismissal proposals but cautions that alternative plans to make it easier to fire workers risk undermining good performance management practices

The Government’s decision to put Adrian Beecroft’s controversial proposals for no-fault dismissal on the policy bonfire were warmly welcomed recently by the Chartered Institute of Personnel and Development (CIPD), as Vince Cable announced a package of employment reforms designed to improve labour market flexibility.

However, as the government announces a range of measures to make it easier for businesses to dismiss employees, the CIPD warns that it is crucial that these are not used in such a way as to undermine mutual trust and confidence in the workplace between employers and employees.

Commenting on the announcements, Mike Emmott, employee relations adviser at CIPD, said: “The idea that businesses should be able to manage the performance of their employees effectively, without fearing extortionate costs and a time consuming process, is a good one. However, the proposed reforms must not undermine the principle of mutual trust and confidence that lies at the heart of positive and productive employment relations.”

Commenting on some of the specific proposals, Mike Emmott said:

• The consultation on ‘settlement agreements’: “The reality is that employment relationships sometimes don’t work out and compromise agreements can be used as a quick, face saving way out for employees and employers. However, we will be responding to the Government consultation to ensure that settlement agreements can’t be used as a first port of call by employers simply because an employee’s ‘face doesn’t fit’. Employers need to understand that there is no substitute for good performance management practices and settlement agreements will do nothing to protect them from discrimination and constructive dismissal claims if they act improperly.

• The change in the cap on payouts for unfair dismissal to a year’s pay: “It is not clear how much of an impact the reduction in the limits to payouts for unfair dismissal will have. The average award for unfair dismissal in 2010-11 was about £9,000, well below the average earnings of most people.  Furthermore, employers need to be aware that this cap will not apply to claims brought against them in discrimination cases, where the cap on payouts is unlimited.”

• The reduction in the minimum time for redundancy consultations: “The CIPD supports a reduction in the minimum time for redundancy consultations from 90 days to 30, to give employers greater flexibility in terms of managing the redundancy process. An employer’s ability to respond swiftly to changing market requirements is a key element of the UK’s flexible labour market. Furthermore, employees themselves may sometimes prefer a shorter period of consultation, when it is clear that redundancies cannot be avoided, as this may help to minimise periods of uncertainty surrounding their future.”

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