How Much Is Your Job Worth?

Have you ever considered how much you would be prepared to leave your job for if you sold it on e-bay? It may be worth less than you think!

The Government appears to be pressing on with its surreptitious erosion of employees’ rights. Having recently extended the length of service required to bring a claim for unfair dismissal from 1 to 2 years, the Government is now proposing to impose a cap on unfair dismissal compensation and to allow employers to offer to pay-off employees without fear of a claim from the employees!

It is difficult to write about these points without sounding too political. As an employment lawyer, I act for both employers and employees and have no political axe to grind. However, there has been a strong swing in favour of employers, which has not had much attention.

A couple of months ago, the flavour of the month was; “compensated no-fault dismissals”. This is a system operated in Australia, Spain and Germany where employees employed in small business have no right to claim unfair dismissal. Instead, small employers are free to dismiss employees who are then entitled to a set agreed sum of compensation.

Vince Cable has championed himself as a protector of employees’ rights on the basis that the Government has recently distanced itself from “compensated no fault dismissals”. What Mr Cable gives with one hand however, he takes with the other – or maybe this is just a feature of a Coalition Government. Under the latest proposals, employees will still have the right to claim unfair dismissal, but seemingly, their compensation will be arbitrarily capped.

The existing cap on unfair dismissal compensation is £72,300, the threat is to cap this figure at a specified amount between one and three times annual earnings. This would potentially mean, an unfairly dismissed employee earning £20,000 would be entitled to a maximum of £20,000 compared to £72,300 under the current system. Arguably, it is unjust to cap unfair dismissal at all. No cap exists for claims based on discrimination and there is no cap on claims for personal injury. So why limit the compensation of an employee whom through no fault of their own has been unfairly dismissed?

Also flying under the radar, is the concept of Settlement Agreements. Under the current system, if an employer is not satisfied with an employee and simply offers a sum of money to persuade the employee to leave, the employee has the right to resign and bring a claim for constructive dismissal. For the offer to be “off the record” or as lawyers would describe it “without prejudice” a valid dispute must first exist.

The new proposal would see employers have the right to offer an employee a sum of money to leave without the threat of any comeback from the employee. I do not see this system working – how is it possible for an employer and an employee to work effectively together after such a conversation?

Surprisingly, these transformational proposals have received almost no attention in the national press. Employers have protested for years that the Tribunal system is unfairly prejudiced in the favour of employees. Some of these complaints may have been justified, but as Mr Cable concedes there is little evidence that easy sackings stimulated growth, and so these changes may well have gone too far. If these off the record severance discussions are used too often, they may be seen as arbitrary and unfair, leading employers in to industrial relations problems.

The proposed cap on compensation and introduction of Settlement Agreements are just that at the moment – proposals (Neither was included in the extensive consultation exercise last year). However, both were included in the second reading of the Enterprise and Regulatory Reform Bill during June 2012 which suggests they are likely to be introduced.     

If you require advice or assistance with regard to the issues outlined above or any other employment matter, please contact either James Twine on 01752 292351 or Eoin Fowell on 01752 292350.


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