Cable to cap unfair dismissal payouts


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

Related Stories

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. "


More on This Story

Related Stories


This entry is now closed for comments

Jump to comments pagination
  • rate this

    Comment number 364.

    I'm surprised at the comments about rogue employees and how the system encourages tribunals and a complaints culture. It is neither easy nor pleasant as an individual to take part in the tribunal process and contrary to what some people believe you cannot simply walk into an employment tribunal because you have a complaint. This is what pre-tribunal hearings are for...

  • rate this

    Comment number 363.

    It is slightly ironic that Cable supports "Unfair" dismissal and does not see the relation to the rest of torry policy he has supported or infact see the word UNFAIR in this one !

    A fairer Britain ! was that not one of the LibDems slogans !

  • Comment number 362.

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

  • rate this

    Comment number 361.

    332. The Bankers etc control the media. When Cameron's shanty towns come with the third world poverty they crave for so the Rich can gain more, our stalinist goebbles style media will simply ignore it and put the interests of the rich and powerful first.

    You will get more honest media in some junta than in the UK.


  • rate this

    Comment number 360.

    As an aside.
    I have had a post removed because allegedly:
    "Are considered likely to disrupt, provoke, attack or offend others
    Are racist, sexist, homophobic, sexually explicit, abusive or otherwise objectionable
    Contain swear words or other language likely to offend"

    None applied.

    I do have trouble dealing with stupid people.

    Especially when I am forced by law to pay their salaries.

  • rate this

    Comment number 359.

    So if the reasons given for this are true why change rights for everybody rather than tackle the misusers? As an ex-Lib dem member I will never go near again - just Cons. JSA claimants forced onto ESA by abusive staff - I've encountered the honest people, in order to fiddle unemployment figures. This started in the 80's (quibble about name!)through 90s, lessened under Labour, as people got jobs!

  • Comment number 358.

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

  • rate this

    Comment number 357.

    About time too Vince. Start with the public sector. How many incompetent teachers and useless police constables have been sacked in the last 40 years? I bet you could count the number on one hand!

  • rate this

    Comment number 356.

    Let's also have a 'company death by dangerous management' act.

    When companies go under, or get into severe difficulty, make it possible to refer it to a judge or panel. If it can be shown that the difficulties were caused by terrible management, then it should be possible to prosecute them.

    Penalties would include fines, assets seizures, and job bans.

    People who do this wreck many lives.

  • rate this

    Comment number 355.

    @32 typicallistener

    "It's vital that employers can fire under performing workers and replace them with more effective ones.".

    The problem with that statement is that what qualifies as on-target performance can and will be a moving target. By simply increasing the demand for productivity once adequate staff become ineffective.

  • rate this

    Comment number 354.

    @350. NonLondonView

    There is nothing I can add - your posting says it all.

    Well said!

  • rate this

    Comment number 353.

    334.Trout Mask Replica

    I presume no-one on HYS would actually defend or condone the mobs and the BBC does not wish to provide a forum for others to incite unlawful behaviour in this country either.

    Gag, Carpet ,under, Sweep.. blinker, moderate, deflect, sanction, where are the Government Ministers ? its either cowardice or disgrace BBC & HMG..

  • rate this

    Comment number 352.

    Once again we see our Politicians protecting the interests of Businesses rather than the interests of human beings who have little choice than to work long, hard stressful hours to survive.

    I deplore what Labour did to this country but I deplore equally as much the contempt this vile bunch of ConDem vermin are inflicting on the UK public.

  • rate this

    Comment number 351.

    339.Norman Brooke
    "Its time we copied German model". In germany if you have less than 10 employees then you do not have to comply with employment legislation and employees have far less rights than british workers.

  • rate this

    Comment number 350.

    There should be no limit for "unfair dismissal"... becaue by definition it is "unfair".
    If the dismissal is "fair" e.g. by employee negligence, or misconduct etc, then no compensation would be due.
    Changes are not needed in my opinion...

  • rate this

    Comment number 349.

    Here we go again. Yet another well thought out disaster. I suggest that the Hon.VC and his ilk read the Employment Protection Acts (to the same degree as the TU Reps) and take on board the remedies.Probationary period, Frustration of Contract and 'Capability' etc. I'm no 'Pro-Boss' but I think maybe some of them really do need to wake up to reality.

  • Comment number 348.

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

  • rate this

    Comment number 347.

    'Ok lets give it a go ! Cable, Clegg ya fired Do not come into work tomorow and have a nice day !'

    I can't believe that you would only stop there.
    Not Cameron, Osbourne, Fox, Hunt, Hague or Alexander?

  • rate this

    Comment number 346.

    I must say the LDs went into the coalition on the basis of a stable government leading to stable markets in the interests of the country BLAH BLAH

    This is no-longer the case. These woeful excuses for economic policy are seen for what they are.

    If there was the prospect of a General Election and the possibility of "Plan B" I strongly suspect the markets would rise.

    DC GO IDS this is risible

  • rate this

    Comment number 345.

    Ok lets give it a go ! Cable, Clegg ya fired Do not come into work tomorow and have a nice day !


Page 14 of 32


More Business stories



BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.