Why Beecroft proposals are good for SMEs and the economy

By: Tara West

Date: 28 June 2012

Last month, all talk of business and employment law was dominated by the controversial Beecroft report. With the deficit crisis that has hit Britain over recent years, the report called for businesses to be able to manage their own affairs more effectively – mainly by chopping and changing employees easily. This has been talked about online and offline, leading people to seek more information from online resources and experts. Let us see if we can shine some more light on it...

Ultimately, the idea is that by being able to get rid of underperforming staff easily, small and medium enterprises will grow better. Unemployment is a huge issue and it is important that companies and enterprises can take on more staff without the worry of how to control the workforce. This is particularly true within SMEs, but how will they be affected by the latest ideas?

Less red tape

It is a thought across the board that red tape hampers SMEs far more than it should. This is counter-intuitive too because for the economy to rise again, the impetus is on the smaller businesses to grow. So, with this in mind, the thought of being able to get rid of employees who drain business resources can be met with happiness to start with.

In Britain as a whole, we have seen an increase of toleration, and this isn’t what we need to aid productivity. And when you consider this point, SMEs will be more willing to take someone on if they know that they aren’t lumbered with them indefinitely. The three-month probation period has been the only way of screening until this point but after that a contract is signed. Though employees may see this as increasing the pressure, it relieves a lot of the employer.

So, how would things change?

As things stand, anyone who is made redundant is given notice and has the opportunity to put in a claim to an Employment Tribunal with the hope of recovering damages. In recent years there has been a change that means an employee has to be employed for more than two years to make a claim, and the Beecroft report hopes to take this a step further.

The proposal is for employers to be able to pay a fixed sum to do away with these claims – a radical move, but one many SMEs support. So, with businesses potentially able to deal with the outgoing of employees quickly, the dynamics of the workplace are likely to shift greatly. But, at the same time there is a worry that employees would take a step back before challenging the direction a business is taking with the fear of immediate dismissal.

Overall, it is hard to see why SMEs would not want these ideas in place. It moves on further to suggest that a business with fewer than 10 employees would be able to get out of many other employment laws. Controversial isn’t a strong enough word for these proposals but, in the main, the beneficiaries would be the SMEs and, eventually, the economy as a whole.

Written by Tara West

For more on employment law as it stands today, take a look at the Law Donut or Irwin Mitchell.

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