Unfair dismissal payments to be capped says Business Secretary

Posted on 14 Sep 2012 by The Manufacturer

An announcement today from Business Secretary Vince Cable proposes a new cap on payouts to employees for unfair dismissal.

Dr Cable has insisted that the measure will give employers more confidence to create new jobs.

The proposed cap represents a cut to the maximum £72,000 employees might currently expect to gain through pursuing an employment tribunal, though in reality this rarely happens. The majority of cases now see awards of around £5000 to £6000.

Cable is also backing the use of settlement agreements between employers and employees in order to reduce the number of employment disputes which come to tribunal.

While showing support for the idea of making it easier to fire underperforming staff, Cable has steered clear of backing the “no-fault dismissal” clause put forward in the controversial Beecroft Report. This is despite the fact that many in the British Chambers of Commerce and in the Conservative Party have said that they would welcome the measure.

Commenting in Cable’s announcement, Steve Radley, director of policy at EEF said it provided confirmation that government is refocusing its policies around issues that matter for growth such as TUPE, reform of employment tribunals and settlement agreements.

He warned however that, “business will be underwhelmed that the overall package contained nothing to speed up progress on delivering these reforms.”

Mr Radley also said that the limited progress being made by government in some areas of employment law reform is undermined by its failure to address the burden placed on employers, particularly in SMEs, by gender pay audits and the threat of a complex system of shared parental leave.

“The government has missed the opportunity to send a powerful signal to business that it has got its programme of delivering genuine employment reform back on track,” he concluded.