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Dismissal plans will not help small businesses grow, says Law Society

22 May 2012

The Law Society has warned that making it easier for small businesses to dismiss people will not help them grow. The warning comes after proposals in the Beecroft report emerged, giving small businesses greater scope to dismiss employees.

Under the proposals, small businesses will be able to dismiss a worker even where there has been no misconduct or they have not performed to the required standard.

The Government says that small businesses are not expanding because of fear of being caught out by employment laws, in particular, unfair dismissal. It wants to exempt those businesses with fewer than ten employees from these laws.

'Making it easier for small businesses to dismiss people will not help them to flourish and expand,' says Chair of the Law Society Employment Law Committee Angharad Harris.

'There is a clear and well understood framework for employers, small and large.
Creating a separate system for businesses with fewer than 10 people will create a 'two-tier' system which will be confusing and unhelpful.'

The Law Society warns there is also the risk that 'compensated no fault dismissal' will encourage poor management practices. Employers might not realise that 'no fault dismissal' doesn't allow them to dismiss a worker because they are pregnant, or because they have a disability.

Angharad Harris added: 'Not only do these changes remove important protections for employees, they also make small businesses vulnerable to other employment tribunal claims.;

'What small businesses and first time employers need is support and advice to understand that employment law is largely a matter of good practice.'

Ends

Notes to editors:

Unfair dismissal laws regulate the way employers can lawfully terminate a person's employment. These laws include allowing employers to terminate someone for misconduct, not performing to the required standard or because there is no longer enough work.

The Government is consulting on compensated no-fault dismissal for micro-businesses with fewer than ten employees. Under such a system, a business would be able to dismiss a worker where no fault had been identified on the part of the employee, with the payment of a set amount of compensation. The Law Society is submitting a consultation response.

When in doubt, the Law Society advises employers to get in touch with their local solicitor.