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Government considers compensated no-fault dismissals for micro-businesses

16 March 2012

The Government has published a call for evidence to gather views on whether current dismissal procedures are too onerous and complex and the idea of a compensated no – fault dismissal procedure for “micro-businesses” with fewer than 10 employees.

A compensated no-fault dismissal procedure would allow micro-businesses to dismiss an employee where no fault has been identified on the part of the employee, provided that the employee receives a set amount of compensation. Employees dismissed through compensated no-fault dismissal would not be able to claim unfair dismissal but could still bring automatic unfair dismissal claims and discrimination claims.

This proposal will give small employers the confidence to dismiss employees who may be underperforming or simply isn’t fitting in to the organisation without following a ‘fair’ dismissal process.

Whilst employees are unlikely to see the benefit of the proposal, it provides an opportunity for dismissed employees to move on with no fault attributed to them and some compensation to help them when looking for a new job.

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