Osborne's unfair dismissal policy won't boost growth

Written by Total Politics has a free weekly Friday email bulletin. Follow this link to register. on 3 October 2011 in Diary
Osborne is to double the qualification period for bringing unfair dismissal claims to two years in an efort to boost growth. This idea is unfair, and won't even work

Unsurprisingly, the overriding message from George Osborne’s speech was the need for growth. Not unexpected – that’s been the line ever since the coalition took office last year.

This speech was designed to outline the action the government is going to take to bring this growth about. According to some pre-speech briefing, we were to expect 12 policy announcements from Osborne today.

I’m not sure I spotted them all, but the ‘credit easing’, where the Treasury is going to start assuming the risk for billions worth of lending to small business is clearly the most notable among them.

However, I was struck by one of the less high-profile policies he announced – the doubling of the qualification period for bringing unfair dismissal cases to two years.

As this Daily Mail story illustrates, the motive behind the move is to try and boost business by making it easier for employers to shed unsatisfactory employees and cut the costs of tribunals. It is estimated that the move will save about £6m a year, which is fairly small change when compared to the overall debt and deficit picture.

I’m just not sure that this policy will really do that much for business. Aside from the worrying fact that it erodes workers’ rights (which I am worried about, by the way), it will have a negative impact on employees and the way they view their employers. In small businesses, relationships are everything. If employees are suspicious, hostile and reluctant to take risks for fear they won’t have any recourse if things go wrong, innovation and creativity and all the other things Osborne wants small businesses to have will be dampened.

It’s also of only hypothetical balance sheet value. A business can’t predict how many unfair dismissal cases it will end up with in any given year, so won’t be able to expand or change behaviour based on this policy providing any kind of guaranteed income.

A specific tax break, however small, is of more tangible benefit to small businesses. I chatted to our executive editor Shane Greer about this, who runs our very own small business. He told me that this measure was fairly meaningless to him – he’s much more interested in a national insurance contribution or similar that would help save jobs than a hypothetical saving like this.

As far as boosting business is concerned, this will achieve very little. And I’m seriously disquieted by the idea that an employee will now have to wait twice as long to enjoy full rights in the workplace.

Tags: Daily Mail, George Osborne, Growth strategy, Unfair dismissal

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