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The Beecroft Report – a helping hand for small businesses?

The venture capitalist’s Report, although controversial, does make a number of recommendations which could offer a significant reprieve to smaller businesses which may be struggling under the burden of employment laws, if they are actioned by government.

Mr Beecroft made a number of wide-ranging proposals, which include:

  • Abolition of third party harassment laws, which would remove employer liability for harassment of employees by third parties.
  • Simplifying the systems regarding work permits and immigration to remove liability from employers for checking workers immigration statuses.
  • Harmonising employees’ terms under TUPE after one year and also introducing a replacement for the “service provision change” rules which are complex and currently create a significant amount of litigation. This would make potential TUPE transfers more straightforward for businesses.
  • Certain opt-outs for micro-businesses (fewer than 10 employees) upon hiring, to include unfair dismissal, pension auto-enrolment and flexible working. This would alleviate some of the legislative burdens employers face in terms of business and risk management.
  • Delay of pension auto-enrolment altogether until the economy has recovered.
  • And most significantly, the introduction of compensated no-fault dismissals whereby a dismissal would be automatically fair if an employer gave full notice and the employee received a statutory redundancy payment.

The BIS published its response to this Report at the end of May.  Read BIS response.  The government confirmed it has already introduced the Agency Workers Regulations 2010 and that changes regarding parental leave and flexible working will be introduced in the new parliamentary session. It also stated it had published calls for evidence on a number of Mr Beecroft’s recommendations including compensated no-fault dismissals, a concept which is very popular among the business community but which has provoked significant opposition from many Labour MP’s and employee groups and Unions.
Business Secretary Vince Cable recently announced during the Second Reading of the Enterprise and Regulatory Reform Bill (“the Bill”), (which these suggestions could potentially form part of) that the concept of compensated no-fault dismissals will not form part of the Bill. If the concept had been introduced, it would effectively have allowed employers in micro-businesses to terminate an individual’s employment for no reason without fear of facing tribunal proceedings.  This would only apply on the basis that the employer gave the individual full notice and paid them a statutory redundancy payment. Whilst this undoubtedly would have been welcomed by many businesses as some measure of security against costly tribunal claims, the government ultimately decided it was not a “sensible approach”.

Whilst Mr Beecroft’s recommendations in this issue have been rejected by the government, a number of other suggestions included in his Report are still being considered and the outcome of these is likely to emerge as the government’s employment law reform programme continues.

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