“Compensated unfair dismissals” – a blessing or a burden for businesses?

The government is currently consulting on whether to grant “micro businesses” (those with less than 10 employees) the right to dismiss their employees without giving a reason, and without the risk of the employee lodging an Employment Tribunal claim for unfair dismissal.

According to the government, making it less risky and easier for start up companies to fire staff will make hiring them seem more attractive, and this will be beneficial to the economy as a whole.

The consultation is joined by a recent BIS report which explores the success (or lack of it) of similar schemes in other EU states.

Whilst it is far from certain that these proposals will become reality, one certainty is that the current coalition government sees the reform and simplification of employment law as a key battle in its war to revitalise the economy.

However, is it really that difficult to dismiss underperforming employees? Would removal of the right to bring an unfair dismissal claim mean that employers can sack staff without fear of consequences? Moreover, is passing yet more legislation really the best way to “simplify” employment law and encourage employers to take on more staff?