The point of employment law is of course to strike a fair balance between employer and employee and to prevent unreasonable exploitation or discrimination. Unfortunately, that is not what the rules and regulations about redundancy and unfair dismissal achieve in practice, at least in the SME world with which I am familiar.
In my 30 years of involvement with smaller companies I have never once come across an instance when an employer has wished to act in the way that these rules and regulations are intended to prevent. Why would an employer wish to dismiss a good employee unfairly? Why would they pick somebody who deserves to be made redundant less than someone else? There is no benefit to be derived from this behavior; it can only damage the employer's own interests.
So there is a fundamental conceptual flaw in the redundancy consultation process, and in the employee's right to appeal against termination, all the way to an industrial tribunal if they so wish. It is a layer of unnecessary bureaucracy designed to prevent something that does not happen anyway.
That would be bad enough. But actually these regulations damage the interests of the very people they are meant to protect. I have often been in situations where the cash in a company is running low. A funding round may be in the offing, or a significant order may be close. Commercially the right thing is to keep going, with a contingency plan in place in case the order does not come, or the funding falls away. But directors often become nervous about solvency, mainly because of the obligations to employees that build up exacerbated by the delay to cost-cutting exercises caused by the redundancy consultation period. As a result jobs have to be cut earlier than they otherwise would. Sometimes even companies are forced unnecessarily into administration or receivership. How is that in the interests of the employees who lose their jobs as a result?
On the other side of the curve, the termination obligations brought by new employees can slow new recruitment and job creation. I have sat on many Boards where the decision has been taken never to recruit in France, or Belgium, Italy and Germany, because of the costs in the event of the operation having to be reduced in size. The UK is not as bad, of course, but it is bad enough.
And the obsession with process when job cuts have to be made also militates against the very fairness and decency that it is meant to promote. Because of the risk of losing a case at an industrial tribunal if the bureaucratic process is not followed to the letter, employers are often prevented from having decent, open conversations with the employees' whose jobs they have to cut. This makes the experience of being made redundant worse than it need be, and then with this potential for creating unnecessary bad blood the likelihood increases of the unlucky employee being angry enough to wish to go to a tribunal.
Unsurprisingly, when employers select staff for redundancy, they try to select the people who are less effective. After all, the objective is to make the business stronger. Employers do not dismiss the staff who are making the biggest contribution. Making it possible for employees to threaten to take their case to a tribunal, and thereby extracting bigger sums of money from the company, is simply another way of rewarding failure, castigated – correctly – by the politicians when it applies to senior staff.
And then there is the additional administrative burden placed on often overstretched management teams at precisely the time when they are under most pressure and need to be left free to focus on the things that can turn their company around.
I think this is a fair dismissal of the junior coalition partners' attitude to these much needed changes.
