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Jill Kirby

Jill Kirby: No fault dismissal is just a distraction - but if this week's employment review implements the rest of Beecroft, business could get a real boost

What impeccable timing. As the Public Accounts Committee reveals that less than 5% of the £1.4 billion given by the Coalition to its Regional Growth Fund has actually reached employers, Vince Cable takes to the stage to offer "intervention and partnership" for struggling industries. In defiance of the lessons of history, and in the face of this most recent evidence of government's inability to create jobs and prosperity, the Business Secretary continues to indulge in statist rhetoric. In his speech yesterday, Mr Cable characterised non-intervention as "complacent". But the real complacency lies in the belief that industry can survive the ever-increasing burden of both tax and regulation on energy and employment, pushing up costs and expanding unproductive back office activity.

The forms of "intervention" sorely needed by industry and business of all kinds are cuts in both energy and payroll taxes, and swift reductions in environmental and employment regulations. Mr Cable's rhetoric aside, there are a few glimmers this week of reality breaking through. Replacing the current health and safety regime with a more common-sense approach will be especially popular with small businesses. BIS is also, we are told, about to unveil a package of employment law reform.

The Business Secretary has already made clear that this package will not include Adrian Beecroft's proposal for "firing at will." No matter.  The concept of "compensated no-fault dismissal" was the least credible recommendation in the Beecroft review. Sure, it captured the headlines, but for all the wrong reasons. To imply that businesses up and down the country are held back by their inability to sack employees on the spot, without offering reasons, not only presents a false picture of most employers, it also feeds the leftist preconception that employers and employees have conflicting interests. In fact the current unfair dismissal warning system, which now kicks in after two years of employment, ensures that employers give underperforming staff the chance to improve; it also helps to create a workplace culture in which employers communicate with their staff and in which employees, in turn, can be confident that they will be treated fairly. This balancing of interests is perfectly reasonable; to reduce it to the expectation of a payoff would not serve the interests of either party.

But the Beecroft report also contains a string of less sensational recommendations which, if implemented, could restore some sanity to employment law. Eminently practical, if less headline- grabbing, they include placing a cap on awards for discrimination-based dismissals, to bring these awards into line with other forms of dismissal compensation. At present discrimination awards are unlimited, providing a real incentive for employees to mount such claims and forcing employers to agree larger pay-offs, regardless of the actual losses suffered. Another sensible suggestion is to rescind the ludicrous provision of Harriet Harman's 2010 Equality Act, whereby employees can bring cases against their employers based on alleged third-party harassment. Beecroft also floats the idea of stripping the “gold-plating” from EU-derived TUPE regulations, to make it easier to rescue troubled businesses. Along his ideas for exempting small businesses (fewer than 10 staff) from some of the more onerous employee rights and regulations, and simplifying tribunal procedure, this set of reforms would help businesses of all kinds – but particularly small start-ups. Not only would it be cheaper than government hand-outs, it would also be much more likely to create real, sustainable, jobs.

Will this week's employment law package from BIS, sketched out in yesterday's Sun, bring these mundane but important reforms to life? The real test for the no-nonsense Michael Fallon and Matt Hancock at BIS will be their success in convincing their Lib Dem boss that this kind of deregulatory action is both practical and do-able – and in moving quickly to put it through Parliament. If they succeed, we can afford to ignore Mr Cable's grandstanding, 1970s-style rhetoric.


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