Cable to cap unfair dismissal payouts


Vince Cable: "Small companies want the confidence to hire, but we don't want fear in the workforce"

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Business Secretary Vince Cable has proposed a cut in how much workers can claim for unfair dismissal at employment tribunals.

He will consult on plans to cut the limit on compensation payouts to a maximum of 12 months' salary.

He also wants to bring in settlement agreements, in which staff agree to leave without being able to go to a tribunal, but get a pay-off in return.

Proposals to make it easier simply to fire workers will not be made law.

The suggested changes come on top of others made in April, which limited unfair dismissal claims to workers who had been in a job for two years, rather than one as before.

'Reduced burden'

Mr Cable said: "Our starting point is that Britain already has very flexible labour markets.

Start Quote

It is not clear how much of an impact the reduction in the limits to payouts for unfair dismissal will have”

End Quote Mike Emmott CIPD

"But we acknowledge that more can be done to help small companies by reducing the burden of employment tribunals, which we are reforming, and moving to less confrontational dispute resolutions through settlement agreements."

Sarah Veale from the TUC told the BBC that the proposals were still wrong.

"The clue is in the term 'unfair dismissal'," she said.

"If people have been unfairly dismissed, this means the employer has done something wrong and it's right that the tribunal should then decide what sort of compensation the person deserves," she said.

But John Walker, of the Federation of Small Businesses, welcomed the altered proposals.

"Too many small firms don't take on staff because they fear being taken to an employment tribunal," he said.

"Other firms fear facing an expensive and lengthy dismissal process," he added.

Shadow Business Secretary, Chuka Umunna: Cable is 'watering down the rights at work'

The current limit on a tribunal claim for unfair dismissal is £72,300, but very few successful claimants are awarded sums anywhere near that.

The average successful claim leads to an award of £9,000, according to the Chartered Institute of Personnel and Development (CIPD).

"It is not clear how much of an impact the reduction in the limits to payouts for unfair dismissal will have," said Mike Emmott of the CIPD.

"Furthermore, employers need to be aware that this cap will not apply to claims brought against them in discrimination cases, where the cap on payouts is unlimited."

Settlement agreements

The original suggestion for a new "no-fault dismissal" regulation was controversial among Liberal Democrats.

Mr Cable himself opposed it, while the idea had the backing of many Conservative MPs and business groups such as the British Chambers of Commerce.

The recommendations were first made in a report, commissioned by Prime Minister David Cameron and compiled by venture capitalist Adrian Beecroft.

The Liberal Democrat minister said the government instead supports making it quicker and easier to dismiss staff by using a new settlement agreement.

This would act as an alternative to going to an employment tribunal, which can be costly and time-consuming, and, according to businesses, make bosses less inclined to hire new people.

The general secretary of the RMT union, Bob Crow, said: "Once again this is Vince Cable and the ConDem government siding with the bosses against the workers and sending out a message that rogue employers can fire staff unfairly in the knowledge that any compensation will be peanuts. "


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  • rate this

    Comment number 164.

    The wealthy are getting treated better, while the ordinary are treated EVEN worse. Job Seekers Allowance claimants are being pressured into going on Employment Support Allowance so that they will not appear on unemployment figures. The same old cheating and worse than when last the Cons were in power. So the LIb dems? I was a member once. I will never vote for them again. Sack clegg & cable

  • rate this

    Comment number 163.


    It works both ways. Company can fire a worker without any fear of tribunal within the first two years. If you hire a lemon and can't figure it out within that time you have only yourself to blame.

    Yes, these laws should be simplified, particularly for smaller businesses that don't have the "benefit" of (normally useless) HR departments. But firing workers must be done fairly.

  • rate this

    Comment number 162.

    Unfair dismissal regulations have been with us since the 1970s.

    Today we all recognise those who destroyed half the world's economies still receive our money for same fake funds we bail.

    As for SMEs, there are many good ones who are starved of support finance. Plus, there are too many who are corrupt who use charitable status to evade tax, or base their operations a few miles offshore from UK.

  • rate this

    Comment number 161.

    By the same token and under fairness and equality, can the taxpaying, voting public dismiss our failing Government with the same ease as Companies can fire employees?????????

    It would not be unfair dismissal as there is plenty of evidence for our case.

  • rate this

    Comment number 160.

    So we will all be on the same pay soon minimum wage and if you don't want to you will be fired, excepting the con and partner club.Then we will see how many people will want the unions to do more.

  • rate this

    Comment number 159.

    Mmmm, I bet all liberal lefties who whinge about this have never ever worked with someone who was completely fact, stop being politically corerect and try being honest - think about the last time you gossiped at work about getting rid an ineffectual time waster who was always off sick!!!!!!

  • rate this

    Comment number 158.

    The Tory Right are in again and you're surprised that worker's rights are under attack? Its what they do.

    The degredations come 'by a thousand cuts' - small increments like this one that eventually erode things completely, and leave the worker simply as a usable resource to generat money for the bosses.

    The struggle carries on...the rights will be restored.

  • rate this

    Comment number 157.

    Why is it that those who work hard for a living must see their rights eroded whilst the wealthy, privileged class see an increase in power & influence (the root cause of this erosion of worker rights) Why do we expect those who caused the problem to provide the solution, are we that stupid? Politics requires strengthening to call the current system to account they no longer serve our interests.

  • rate this

    Comment number 156.

    Why can I hand in notice and leave when ever I wnat for whatever reason, but my employer can not serve me notice on the same basis?

    Surely emplyment laws are one sided and biased against employers?

    (I do not own a company or employ staff)

  • rate this

    Comment number 155.

    "Very soon the day will come, under this govenment, when my pet cat has more rights than I have."

    You have a cat?

    Surely we Tory's have found a way to tax you for that! I mean, the tax breaks for us and our millionaire chums have to be paid for somehow?

    Membership of the Bullingdon Club is very expensive after all. You don't really expect US to pay?!?

  • Comment number 154.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 153.

    I'm a long term fan of yours Vince, but I'm afraid you are barking up the wrong tree with this one. Please leave this sort of thing to the nasty party.

    The key words are "Unfair Dismissal".

    Why should an employer's liability be limited to max 12 months pay if a worker has been unfairly dismissed? Surely it is for an employment tribunual to decide on what is a fair rate of compensation.

  • rate this

    Comment number 152.

    Decent employees tend not to get sacked.The current system is too legalistic and expensive.The uncompetitiveness of Greece,Spain,Italy and to a degree France is in part because it is almost impossible to dismiss anyone.There are also a few issues about strike ballots which need to be sorted as well.

  • rate this

    Comment number 151.

    Unlimited fines for discrimination give women & ethnic employees in particular give draconian rights which can sometimes be abused by the employee.

    Some of the compensation claims made particular by public sector employees largely for hurt feelings are outrageous and come straight from the taxpayer.

  • Comment number 150.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 149.

    Employees have the right to walk out of a job for no reason at all contracts of employment do not seem to be a two edged sword and restrictions on them taking taking their priviliged training and information to a competitor are toothless on the other hand employ someone who engineers constructive dismissal and is a company liability your stuffed

  • rate this

    Comment number 148.

    The UK government is still trying to fix the wrong problem. Its a demand side recession, not a supply side one, and reducing job security will make that worse.
    I dissagree, most jobs created under Gordon Brown were public sector, UK business is not competitive, what money that does get spent helps the Chinese/Koreans/East Europeans more than UK.

  • rate this

    Comment number 147.

    Were the Beecroft protocol applied universally I suspect Messrs May, Hunt, Lansley, Gove and Maude would already have joined the Jobcentre plus queue - along with HMRC Board, Mervyn King, most senior bankers.

    There does not appear to be consistency in the way that principles would be applied across the socio economic spectrum, in the same way that application of the law is now discretionary

  • rate this

    Comment number 146.

    This is a great opportunity for rogue employers to treat people even more unfairly than at present and get away with it.

    Clearly the idea of no win no fee lawyers taking cases and using civil law will be an option.

    With this kind of proposal Vince Cable is nailing himself very clearly to the Tory mast so any sweet talking with the Labour leader should be given short shrift.

  • rate this

    Comment number 145.

    Trillions of pounds shipped out of the country by bad companies and bosses, and so country starts to be lowered to technology position of 3rd world. This will worsen the economy. I suggest libdems dump clegg and cable, elect more moderate and form coalition with Labour, for a couple of years at least otherwise LIbs decimated at next election. Use dto vote for them, no chance now unless change


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