Cable looks to encourage settlement agreements

Cable is looking at plans that will drastically reduce the amount of compensation employees can win during unfair dismissal tribunals.

He said, “More can be done to help small companies by reducing the burden of employment tribunals…and moving to less confrontational dispute resolutions through settlement agreements.”

The Business Secretary is considering proposals that will see payments limited to a maximum of 12 months’ salary.

Another facet of the employment reforms was David Cameron’s idea of a “fire at will” policy in the workplace. This proved unpopular, and Cable has managed to significantly water down the policy so that bosses can no longer sack staff on impulse.

This said, bosses will still be given more power over hiring and firing  which does include more legal protection when sacking underperforming staff.

The UK has a lightly regulated, flexible labour market that the OECD considers to be amongst the best in the world, behind only USA and Canada. The recent World Economic Forum Global Competitiveness Report cited the flexibility of the UK’s labour market as one of the main reasons for its improvement in the global rankings to 8th from 10th.

“Our starting point is that Britain already has very flexible labour markets. That is why well over one million new private sector jobs have been created in the last two years, even when the economy has been flatlining," Cable said.

But unions have reacted badly to the new proposals, claiming that they give far too much power to employers.

Chris Keates, general secretary of the NASUWT, said, “However the Coalition seeks to spin this announcement, this emphasises the contempt for working people which pervades the Coalition's policies.”