If you haven’t read the last two posts dealing with my correspondence with Dominic Raab MP, then feel free to pass over this post too. However, once something has started you have to finish it, and this weekend I received a detailed reply from Dominic to my last email. I think we’re done now, but I set out below his response to me and then my reply.
I don’t agree with Dominic’s analysis, but I have to say fair play to him for engaging with the debate in the way in which he has. I shall watch his future career with interest!
Anyway, here is his email to me, followed by my reply. After this I think we can all move on to the next thing to rant about.
Thanks for your further email. I have thought about this a little further, and looked back over my report again. I would just make a few points.
First, I think as a legal expert you over-estimate the clarity and certainty of the law for the layperson trying to interpret it. I was struck by a recent Institute for Directors survey of 1,277 of its members that found 67% thought the government should do more to reduce business regulation, and 62% thought the govt had not done enough to simplify employment law – two of the biggest complaints made. Of course, you are right that there are a range of reasons that can be deemed fair and unfair. There are reasons for fair dismissal that employers can avail themselves for poor performing staff eg ‘capability’. But, I don’t agree that the law is as simple as you suggest. In fact, this area of law is quite detailed, complex and circumscribed – as the burgeoning text and practitioner’s books attest. So, just because you can point to precedents in the jurisprudence that show employers have grounds for dismissal in certain tightly-defined contexts, it doesn’t mean the law is clear for employers (or employees) in their day to day working lives. I know a lot of employment lawyers with a full range of clients. They invariably say that litigation in this area is acutely uncertain.
Second, aside from uncertainty as to the substantive law, there is also the burden of proof. As you know, the burden of proof is effectively reversed in employment cases and imposed on the employer to prove fair dismissal – rather than requiring the employee to demonstrate their claim of unfairness. That makes a big difference. As well as engaging in detailed legal argument, critically, the employer has to mount the case that dismissal is fair, rather than the employee demonstrating unfairness. That further magnifies the risk in defending even spurious cases.
Third, while this is burdensome for all businesses, larger ones with big HR departments are better able to navigate the law and procedures necessary to safeguard their position from abuse or spurious claims. Even then, the reality is that even if there is a very poor performing member of staff, they often leave with a much larger pay-off than they would be entitled to from a tribunal. This is regular and standard practice. Why? Because, for a large share of employers it is just not worth the hassle and cost to defend meritorious cases. Almost by definition, those are claims or cases that don’t go to tribunal. If that is true in larger businesses, it is a major factor for Small and Medium-sized Businesses. And that’s the rub. That fear of litigation or being straddled with a poor performing worker has a chilling effect on small businesses from hiring in the first place. As qualified solicitor myself, I hope you don’t mind me saying that we lawyers are rather too quick to blame those interpreting the law for being over cautious or ill-informed – as you say in your last email. The fact is that the employment rules that look clear to you and other experts look like a regulatory and litigation nightmare for even a conscientious employer (especially a small business owner).Bearing in mind a large proportion of new jobs created in the economy come from SMEs, that is a very real worry. In all of this, my overriding policy priority is to see more jobs created, and thereby cut unemployment especially youth unemployment (still over 20%).
Fourth, you say my evidence only comes from employers. That’s not strictly true, although the evidence from employers (especially small business owners) is substantial. But, it also has a debilitating impact on staff morale when coasting or under-performing staff take the firm for a ride. I have seen that in various contexts, and the frustration is understandable. Let’s be honest, it is not the kind of thing the unions or employers groups advertise. But, in my experience hard-working employees tend to resent firms being saddled with poor performing colleagues as much as the ‘bosses’.
Likewise, you argue that the so-called reformers are misleading the debate. Be honest about this. Those defending the status quo are often just as misleading in their description of employers. Yes, there are always two sides of the story in a work-place dispute. However, the lazy caricature of miserly and mean employers ready to fire on an arbitrary whim grossly distorts this debate. The reality is that it is entrepreneurs, small businesses and employers who are the ones who will drive business growth and create the jobs we need in Britain.
Fifth, I agree with you that the debate over Beecroft was rather polarised and misleading – but not only for the reasons you say. As I spell out in my report, the issue of unfair dismissal is one of balance and degree. As it happens, I never advocated the Beecroft recommendation on no fault dismissal, but rather a variation – and there are many other shades of grey. But, is it your view that the law as currently configured is perfect? Are there no changes you think would be reasonable either to the substantive law or procedural hurdles before the employment tribunal? Did you oppose the extension of the initial period before which an unfair dismissal claim can be brought from 1 to 2 years? That was arguably a much bigger practical change. Do you oppose measures to encourage early filtering out of vexatious or spurious claims? I may be wrong, but I suspect from your emails that – because you rather casually dismiss the perspective of businesses and employers – you advocate defending the status quo. Or perhaps you think employee protections should be increased? It is entirely respectable to take up either position. But, I just wasn’t clear what your position was on the substance of the debate, or on what basis.
I wanted to give you a more thorough reply. I suspect we will not reach a common agreement on this, but I am grateful for the chance to engage with you on this. Please forgive me if I don’t have a chance to respond to any subsequent reply – but rest assured that I will read it with great interest. As the great John Stuart Mill used to say, he who knows only his side of the case knows little of that!
All the best, Dom Raab
Once again I’m grateful for you taking the time to reply to my email, and in particular for doing so in such depth – very much beyond the call of duty. I appreciate that you don’t have the time to continue this correspondence indefinitely but I did want to address the specific points that you make.
We may just have to differ over how clear the law is when it comes to dismissals for poor performance. However, I do acknowledge that the subject is not well or easily understood by non-specialists. That is why it is so important that it is explained clearly. Rather than change the law in this area – so that employers have some other form of words to be confused about – surely it would be more productive to explain the current law properly so that both employers and employees understand it? That process is not helped by extravagant claims made in the press about how the current system is weighted against employers.
I am less impressed by the IoD surveys than you are. Any poll asking the question ‘Has the Government done enough to X’ seems to me to be likely to get a negative response. As to the simplification of employment law, I am actually surprised that the figure is as low as 62% – after all the government hasn’t really simplified employment law at all has it? The two year qualifying period (to which I was moderately opposed) does not really simplify the law and the current Enterprise and Regulatory Reform Bill will make the employment tribunal process considerably more complicated (just try reading the new provisions on time limits in Schedule 2). For me, simplification is a bit of a red herring. Whenever a lobby group (on either side of the debate) puts forward a proposal for simplification they usually simply want to shift the balance of the law more in their favour. Let’s concentrate on employment law being well drafted rather than simple.
I do agree, however, that litigation in employment law is inherently uncertain. This is the nature of the system that we have and the desire to keep the process informal (relatively speaking). I am not defending the Employment Tribunal system at all and would be happy to see proposals for radical reform. However that does not mean that the law of unfair dismissal is other than as I have described it. Even if the law was changed to reflect your proposals, that uncertainty would remain. Indeed, as the system would be dealing with a newly drafted law, for which no case law had developed, the process would be even more uncertain.
On your burden of proof point, I hope you will forgive a technical answer. In unfair dismissal cases the burden is placed on the employer to show the reason for dismissal and that it was a reason falling within one of the list of potentially fair reasons for dismissal – conduct, capability, redundancy, statutory ban or ‘some other substantial reason’. This should be a very easy burden to discharge as the employer can usually explain why the employee was dismissed. The main issue in an unfair dismissal case is whether the employer has acted reasonably, and here there is no burden of proof (See S.98(4) Employment Rights Act 1996). The burden was once on the employer to demonstrate reasonableness but this was changed by the Employment Act 1980 so that the burden was ‘neutral’. That Act also introduced the requirement for the Tribunal to consider the ‘size and administrative resources’ of the employer’s undertaking when considering fairness.
There is a reverse burden of proof in discrimination cases, but that is a whole other can of worms.
It is worth noting here that the courts have developed a test for fairness which is extremely employer friendly. The ‘band of reasonable responses test’ gives a huge amount of discretion to the employer to determine whether dismissal is appropriate or not. For this reason, most unfair dismissal findings are to do with procedural unfairness only and yield the employee very little in terms of compensation.
I think there are a number of reasons why employers make pay-offs in excess of likely tribunal awards. The cost of defending even a spurious claim is certainly one of them. However, such offers are also made to avoid any obligation to behave reasonably, or because the employer acknowledges that it has failed to manage the situation appropriately and wants a clean break.
I quite agree that the fear of litigation has a negative effect on small businesses. That is why it is important that we do not make out that the risk is greater than it really is. I don’t blame businesses for being overcautious or ill-informed. I blame the poor legal advice they are often given. It is easy to advise an employer that they can’t do something and then blame the law rather than the inexperience or ignorance of the adviser. The current debate about red-tape plays into that ignorance because it stresses the risks that employers face and plays down the extent to which they can in fact do what they need to do.
I also agree that employees are adversely affected when their employers fail to deal with poor performance on the part of one of their colleagues. I too share their frustration. But poor management is to blame for this just as much as any perceived problems with the law. Every single organisation I speak to admits that it has a problem in persuading line managers to challenge poor performance in an appropriate way. This is not a problem with the law, it’s a problem with our culture and a very British aversion to having difficult conversations. Improving performance management skills would do more to help British business than any number of employment law reforms.
I certainly don’t believe that current employment law is perfect. There is a huge list of changes that I would make given a free hand. Far from defending the status quo, I would like to see some radical reform. At this point I could set out a whole manifesto of changes that would make the world of employment law a much better place. By no means all of these changes would shift the ‘balance’ towards employees. I pride myself on being independent; I don’t serve the vested interests of either side in this debate.
The danger of reforming employment law, however, is the instability that results from any new piece of legislation – even if it purports to make things simpler for employers. Much as I would like to rewrite the statute book, I think business benefits from stability. That is why I think that any proposal for reform must at least be based on a sound analysis of the law as it currently is, rather than be designed to deal with a perception, or to create the impression that politicians are responding to the pressures put on them by the business lobby.
Ultimately, I think that the problems that you have identified with the law of unfair dismissal are more to do with the way in which the law is perceived than what it actually says. The right course, to my mind is to put more effort into explaining to both sides how the law really works. I initially wrote to you because I felt that the proposals you were making, and the way in which you made them actually made that task harder. I still do.
Having said that, I have enjoyed our correspondence, I do appreciate the way you have engaged with the debate. I look forward to reading your book!