"Coast along" employees should lose right to unfair dismissal, leaked report says

The report, obtained by the Daily Telegraph, said that the current rules allowed some employees to "coast along" knowing that it was difficult for them to be dismissed.

The current rules "make it difficult to prove that someone deserves to be dismissed, and demand a process for doing so which is so lengthy and complex that it is hard to implement", the report said.

The report was commissioned by the Prime Minister and written by Adrian Beecroft, a venture capitalist and Conservative Party donor, according to the newspaper.

Employees are currently able to bring an unfair dismissal claim against their employers once they have been in their jobs for one year. An unfairly dismissed employee can receive a cash award or in certain circumstances be reinstated or re-engaged in a comparable role.

Earlier this month the Government announced that the time a worker has to serve as an employee before being eligible to claim unfair dismissal will be doubled to two years from 6 April 2012. In addition, employees will have to pay a fee to take a case to an employment tribunal which they will only have to get back if they win.

Chancellor George Osborne said that the changes would make it "much less risky" for businesses to hire people.

In his report, Beecroft argued that the current unfair dismissal regime has a "terrible impact" on the efficiency and competitiveness of UK businesses.

He concluded that, providing regulations preventing discrimination or dangerous work conditions remain intact, there would be "no legal barriers" for replacing unfair dismissal with "compulsory no fault dismissal". "Unfair dismissal is a UK concept and not an EU one," he said.

However he added that it was unlikely such a policy would be "politically acceptable".

Employment law expert Leah de Vries of Pinsent Masons, the law firm behind Out-Law.com, said that the changes essentially amounted to the dismantling of current laws on unfair dismissal and were very unlikely to progress beyond speculation.

"This debate will play to the perception amongst some employers that current law unduly restricts their ability to dismiss poor performers from their organisations but the reality is that many employers don't appreciate the flexibility they have. Often this is because of ignorance, poor advice and a general risk averse attitude which can be effectively addressed through educating business owners and training managers to be proactive and robust in their decision making," she said.

She added that current unfair dismissal laws already allow employers to dismiss underperforming employees provided that a fair procedure is followed and the employer makes a 'reasonable decision'.

"The unfair dismissal law only protects employees from a sudden decision, without prior warning, to dismiss in circumstances where they haven't been given explanation or opportunity to improve. Even then, that protection only applies to employees with 12 months service, soon to be extended to two years service. So employers who identify poor performance early in the employment relationship have even more freedom to dismiss," she said.

A Downing Street spokesman said that they would not comment on leaked reports.

"The Government is committed to reforming employment law, supporting business, encouraging growth, while at the same time ensuring that we do not weaken the employment rights of workers up and down the country," he said.