Isle of Man: Employee Rights – Up In The Air

Last Updated: 21 August 2012
Article by Caren Pegg

Changes To Employment Law For Easier Expulsion Of Underperforming Employees: Is It Feasible And How Would The Law Continue To Protect From Unlawful Dismissal?

Last Year, A Confidential Uk Government Report Commissioned By The Prime Minister And Written By Venture Capitalist, Adrian Beecroft, Was Leaked. It Argued That Companies Should Be Allowed To Run Their Businesses In Ways Which Enable Them To Become More Efficient. The Report Stated That It Should Be Easier For Businesses To Dismiss "Under-Performing" Employees, Suggesting An Overhaul Of Unfair Dismissal Rules To Make This Possible. It Recommended A New Regime Called "Compensated No Fault Dismissal", Which Would Allow Employers To Sack Underperforming Staff With Basic Redundancy Pay And Notice. The Full Report Was Not Produced At The Time And The Proposals Were Reportedly Dismissed By Vince Cable As "Bonkers".

On 15 March 2012, The Issue Was Raised Again When The Uk Government Issued Another Consultation Document As Part Of Its Review Of Employment Law And Practice. In This Review, The "No-Fault Dismissal" Re-Surfaced In A Modified Form. This Document Transformed The Original No-Fault Dismissal Concept Into A Specific Exemption For Small Businesses With Fewer Than 10 Employees. The Original Beecroft Report Was Also Published In Full. The Publication Of The Full Report Revealed That Beecroft's Proposals For "No Fault Dismissal" Were Combined With Additional Concessions For Small Businesses, Including A Complete Exemption From The Law Of Unfair Dismissal. The Uk Government Has Subsequently Made It Clear That Such Wide Exemptions For Small Businesses Are Not Going To Be Implemented.

There Are Already Mechanisms In Place For Dealing With Poor Performance Including The Use Of Probationary Periods, Appraisal Systems And Capability Procedures. If Used Correctly, They Can Assist In The Effective Performance Management Of Employees. However, For These Procedures To Work, The Employer Must Bring To The Employee's Attention The Required Standards And Targets Of The Business At The Outset Of Their Employment.

Probationary Periods, Of Usually 3 To 6 Months At The Start Of An Employee's Appointment, Are Also An Effective Tool To Enable Employers To Assess A Particular Employee's Suitability For A Role. The Employer's Risk Of Claims Being Brought Against Them During This Period Is Limited. This Is Particularly So In The Uk Where The Regulations Surrounding Eligibility For Unfair Dismissal Claims Have Been Made More Stringent. From 6 April 2012, Uk Employees Must Have Accumulated Continuous Service Of At Least 2 Years In Order To Be Eligible To Claim For Unfair Dismissal. Currently, Such Changes Have Not Been Followed In The Isle Of Man And The Eligibility Criteria Remains At 1 Year.

It Is Clear, Therefore, That There Is A General Shift In Focus From Employee To Employer Rights, A Recognition That The Current Law Is Employee-Biased And An Acknowledgement That Something Should Be Done To Redress The Balance.

Perhaps The Way Forward Is Signalled By A New Approach Suggested By The Uk Government In The Enterprise And Regulatory Reform Bill. The Bill Proposes That An Offer Of Settlement Cannot Be Used Against An Employer In A Standard Unfair Dismissal Case. It Has The More Limited Aim Of Making Sure That Employers Wishing To Broach Paying Off An Employee Are Protected From This Being Used Against Them In Subsequent Unfair Dismissal Proceedings. At Present, Such Conversations Are Not Necessarily Without Prejudice, Though In Most Cases Will Be If Properly Structured And Timed Correctly. This, However, Is Sometimes Difficult To Achieve. It Will No Doubt Offer More Comfort To Employers To Be Able To Engage, Without Prejudice, In Discussions With A View To Agreeing A Fast Exit With An Employee. This Option Is Intended Only For Use When There Is A "Genuine Problem" With A Worker, Such As Persistent Underperformance.

The Ultimate Aim Must Then Be To Streamline The Regulation Of Workplaces And Reduce The Burden On Employers When Employing Staff. There Is Clearly A Balance To Be Struck In Such An Exercise Because, Equally, Employees Need Basic Statutory Protections Just As Much As Employers Need Flexibility. However, More Flexibility For Employers To Deal With Underperforming Employees Efficiently To Ensure That They Remain Competitive In The Current Economic Climate Must Surely Be Welcome.

As Originally Appeared In Portfolio Magazine – August 2012

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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