I am in London this week for a conference. The Conservative Party conference is also this week, so the papers are full of their latest ideas on how to dismantle civil society.
Their big idea this year is to introduce US style ’employment at will’. Existing workers be given the ‘choice‘ of swapping their right to redundancy pay and claim against unfair dismissal for tax free shares. New employees would get no choice.
Predictably, the unions are opposed to any dilution of workplace rights, but this idea makes (almost) no sense to me as a businessman either. My experience of US ’employment at will’ laws is that they create almost as many headaches for management as they purport to solve. The main practical impact is that unfair dismissal claims are brought as discrimination cases instead. About 70% of the typical US workforce can plausibly claim to be a member of at least one minority and the remaining 30% must be given access to all the same considerations and procedural checks as non minorities.
The broad ‘opt-out’ being proposed by the Tories is only going to remain attractive as long as the Tory party is in power. A Labour government can render any concessions made to management null and void. So a business considering taking an opt-out has to forego real money now in the hope of what is likely to prove a temporary gain.
To be fair to the Tories, a case could be made for weaker employment protection to encourage forming startups. I had no problem with employment at will when I joined a startup because the odds of the company failing and being unable to make payroll were much higher than the probability of unfair dismissal. Severance payments based on number of years of employment do not amount to much in such cases anyway. Labour might be persuaded to accept a time limited proposal that would allow a company to issue such contracts for its first five years. But the UK Labour party was originally founded by the Trades Unions, and is guaranteed to repeal a measure whose principle objective is union busting the minute it is given the chance.
For established businesses, the calculus is rather different. Far from being purely an obstacle as the ideological purists hold, worker rights can actually be useful. Replacing employees in my industry is very expensive, and the last thing most businesses want to have is a manager who is casually dismissing people.
Contrary to GOP/Tory propaganda, the Walmart model of employment is not the one most businesses aspire to. The possibility that a worker who is treated unfairly might take their case to an Employment Tribunal is actually a very useful control. Most of the valid unfair dismissal claims I have seen have involved a mid level manager trying to hide either their own incompetence or their sexual harassment of staff from senior management.
Of the workers rights provided under UK law, the only one that would appear attractive to most businesses are the right to dismiss staff for joining a union. Which is almost certainly the objective behind the scheme and the reason the Liberal party is willing to tag along. Both have a vested interest in attacking Labour’s funds. Workers are hardly likely to cash in their right to redundancy pay unless either the value of shares on offer is greater or they are planning to leave anyway. Besides, who really wants shares in a company whose survival depends on its ability to make large numbers of staff redundant?
The only case in which the Tory/Liberal scheme makes sense is if a unionized company wants to buy out the right to union membership, and discriminating against union members is one one of the rights that are given up. Press reports of the scheme do not mention if this form of discrimination is included in the agreement, or excluded as race and sex discrimination are.
Given the nature of UK politics it is hardly likely that the Tory party would not consider how a new employment policy would affect union membership, and their silence on this particular point speaks volumes as to their true goal.