The way to employ people is to fire them

There is a growing consensus amongst conservatives in the UK that the biggest problem our nation faces is that too many lazy and unproductive workers are unfairly taking their employers to industrial tribunals after being rightfully dismissed. This in turn is causing prospective employers to decide against hiring people, and is thus creating unemployment.

In response to these concerns, David Cameron has decided that the qualifying period before somebody has the right not to be dismissed unfairly will be doubled to two years from the present one year. Predictably this has led to criticisms from the unions, and the usual neo-liberal suspects have weighed in with the standard defence that making it easier to fire workers will reduce unemployment.

This is just simply not logical. In order for you to believe that taking measures to make it easier to unfairly dismiss workers will lead to higher employment, you have to believe the following things are true:

1. That a significant proportion of the county’s businesses are currently wanting to employ people, but have such a severe lack of confidence in their recruitment policies that they not believe they are capable of weeding out inappropriate candidates.
2. Furthermore, British businesses also have such a lack of confidence in their staff appraisal and review processes that they feel unable to identify mistakes in their recruitment processes throughout the first year of an employee’s service.
3. That if we extend the qualifying period before claims of unfair dismissal are allowed from 1 year to 2 years, all the above businesses will all of a sudden take the plunge and start employing people.

The above would be amusing even if we had a booming economy. In the context of the most severe economic crisis of living memory it is absurd to believe our employment problems will be solved by this proposal. It is irrelevant. Even during an economic boom, if an employer is not sure whether an appointment will work out they can always employ somebody on a temporary contract whilst they make a decision. Indeed many businesses already recruit through first employing temps through an agency. Frankly if it takes a business over a year to decide whether somebody can do a job properly then they need to seriously reconsider their HR policies.

It is also a proposal that would do nothing to stop vexatious litigation, a vexatious litigant by definition would simply move from making a claim of unfair dismissal to making a claim of sexual harassment, or racism. Do the Tories now propose allowing employers to sexually harass their employees in the name of ‘reducing the costs of employing someone’?

If businesses really are put off employing somebody because of the potential costs of employment tribunals, then the answer is to improve the process by which the employment tribunal system works by introducing reforms that identify and throw out vexatious claims early on in the process, reducing the legal costs of defending yourself at a tribunal, and introducing better and earlier mediation.

However, even if the above was introduced, I suspect the impact on employment would be negligible. The reason we have high unemployment is not because it is difficult to fire people (we have one of the lowest levels of employment protection in the EU anyway), it is because there is a low aggregate demand for labour.