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Coalition splits over Beecroft report

A gulf has opened up between the Lib Dems and Conservatives over the extent to which employment laws protecting workers should be scrapped.

22 May 2012

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The government doubled the qualifying period for unfair dismissal claims from one to two years in April and is committed to wholesale reform of tribunals, including the introduction of fees.

A dispute has now arisen over whether ‘micro-businesses’, businesses with ten workers or less, should be completely exempt from the rules on unfair dismissal, pension auto-enrolment, flexible leave and other employment rights.

This was one of the recommendations of Adrian Beecroft, a leading Conservative donor and former managing partner of global private equity and venture capital firm Apax, in a leaked report for Downing Street last year (see 1 November 2011).

Others include replacing unfair dismissal with ‘compensated no-fault dismissal’, allowing employers to sack poorly performing staff so long as they paid them redundancy pay and notice, and reintroducing the default retirement age.

Business secretary Vince Cable was widely reported this morning to have described some of the proposals as “bonkers”, although the prime minister is understood to be much more positive.

Cable is said to have told The Daily Telegraph: “At a time when workers are proving to be flexible it would almost certainly be counterproductive to increase fear of dismissal.

“One of Mr Beecroft’s recommendations was a suggestion to bring in no-fault dismissal. In my daily conversation with businesses, this has very rarely been raised with me as a barrier to growth.”

However, the business secretary said on the BIS website this morning that the Beecroft report was being published to dispel some of the myths associated with it.

“Because of ongoing interest, we reached a view that it is in the public interest to allow people to have access to its content,” he said.

“The government has a duty to ensure the labour market provides economic and employment opportunities, and has therefore set out a parliament-long review of employment law.

“Beecroft came and spoke to officials in the Department for Business, Innovation and Skills last year while compiling his report. Consequently, the vast majority of proposals in the final report reflect ongoing work by the department.”

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