Call to scrap unfair dismissal

26 October 2011 Last updated at 03:01 ET

Currently, workers who feel they were unfairly dismissed can make a claim after 12 months in a job

Unproductive workers should lose their right to claim unfair dismissal, a leaked government report says.

The report, commissioned by the prime minister, argues this would mean more capable people would replace those sacked, boosting economic growth.

The Daily Telegraph quotes the report as saying that under current rules workers are allowed to “coast along” with some proving impossible to sack.

Downing Street says changes to unfair dismissal rules are “unlikely”.

Currently, workers who feel they were unfairly dismissed can make a claim after 12 months in a job.

The report – which has not been made public – was written by Adrian Beecroft, a venture capitalist and Conservative Party donor.

The coalition government has stated its committed to reforming employment laws.

Chancellor George Osborne recently announced new measures aimed at restricting the number of unfair dismissal claims.

He announced that, from April 2011, the qualifying period for a claim for unfair dismissal would be that the individual must have been in the job for at least two years.

‘Coasting’ staff

However, Mr Beecroft’s report goes further – calling for an end to unfair dismissal, a regulation that the report’s author thinks is particularly abused by some in the public sector.

A draft seen by the Daily Telegraph warns that incapable workers are being left to “coast along”. Firms also fear expanding because new staff may prove “unknown quantities” who are impossible to sack.

The newspaper says a final draft of the document, dated 12 October 2011, says the first major issue for British enterprise is “the terrible impact of the current unfair dismissal rules on the efficiency and hence competitiveness of our businesses, and on the effectiveness and cost of our public services.”

It reports that the document goes on: “The rules both make it difficult to prove that someone deserves to be dismissed, and demand a process for doing so which is so lengthy and complex that it is hard to implement.

“This makes it too easy for employees to claim they have been unfairly treated and to gain significant compensation.”

‘Unlikely’ move

Mr Cameron and others in the cabinet are considering the recommendations.

But Downing Street sources told the BBC’s Robin Brant no decisions had been made, and added it is “unlikely we would go further on unfair dismissal”.

Our correspondent said an adviser to one senior Liberal Democrat cabinet minister told him they believe such a move could undermine consumer confidence by creating large scale job insecurity. That claim has been countered by Downing Street.

In 2010-11 the cost to the taxpayer of running employment tribunals and the Employment Appeal Tribunal in England, Wales and Scotland was more than £84m, according to the Ministry of Justice.

The Treasury said that more than 80% of applications made to an employment tribunal did not result in a full hearing.

Almost 40% of applicants withdrew their cases, but employers still had to pay legal fees in preparing a defence, it said.

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