The government’s decision to increase the period which employees have to serve
before they can bring a case of unfair dismissal from one to two years is welcome. But if it wants to encourage small and medium sized enterprises, the engine of the economy, to hire more people
then they need to take the shears — not nail scissors — to regulation and employee protection laws.
Camilla Cavendish has a cracking example of the absurdity of the current system in her column (£) today:
‘A London neighbour of mine, Mr B, runs a small business that is doing well. Last year he took over an insolvent company where the staff were about to lose their jobs. He was amazed to discover that under the 2006 TUPE (Transfer of Undertakings, Protection of Employment) regulations, he could not change the contracts of any of the staff if he took them on, although they were paid more, had longer holidays and different hours from the people who were already working for him. If he took on Mary in customer services, he would have to pay her more than his longtime faithful employees Mabel and Sue. But if he didn’t take on Mary, he would have to justify, under redundancy law, why he was jettisoning her, instead of Mabel or Sue. He had to pay off Josie, Mary’s colleague who had worked only a few months before taking a year’s maternity leave, even though she would have received nothing if the company had gone bust. Mr B almost gave up. In many ways it would have been easier for him to stay small rather than to double the size of his company. In the end he did hire most of the new staff. They are very grateful, diligently selling more gizmos and keeping the great wheel of commerce turning. But it has cost him thousands of pounds in legal advice, and in paying the new staff more. And now, because of the TUPE rules, he fears that he has fallen foul of Harriet Harman’s Equality Act, which says that people should be paid equally for doing the same job.’
Until the coalition fixes this, there’ll be a drag on the attempt to get the economy moving again.
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