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 424.

    Cable - just go. You are an absolute disgrace and an embarrassment to free-thinkers.

  • Comment number 423.

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

  • rate this

    Comment number 422.

    Austerity measures did nothing to help the UK economy and neither will sacking people. It will undermine confidence even more.

  • rate this

    Comment number 421.

    If a company says it will take its business else where it will do so for financial reasons not for employment reasons, profits are the name of the game, not whether a person can claim a sum of money for unfair dismissal. Most of what he says already happens he's only talking about the maximums.

  • rate this

    Comment number 420.

    It is vital workers have rights but workers who are under-perfoming in a small business can drive it out of business and risk making others redundant in the process. We need a sensible balance here and I think Vince Cable has it about right.

  • rate this

    Comment number 419.

    Another backward step.

    Unfortunately, I’ve met more incompetent British managers than any other! This just merely encourages their incompetence.

    The crazy notion that by making it easier to sack workers will somehow “jump-start” the economy is plain nonsense.

    I wait for the argument that feudalism was a good thing.

  • Comment number 418.

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

  • rate this

    Comment number 417.

    Isn't it about time we had a general election to get these frauds out of power!
    If it unfair its unfair that means IT IS WRONG and WAS WRONG!
    These MPs don't live in the real world and is about time they were brought into it by removing them from office.
    I for one will never vote liberal democats again!

  • rate this

    Comment number 416.

    411 Thanks Socialist Apocalypse, sort of helps, just thought there were other things happening right now that might warrant a debate

  • rate this

    Comment number 415.

    The UK isn't bad as for employee rights. If you were in North America you have to get a lawyer which is far more daunting. Working in the Public Sector there are drones who fake stress but it's usually down to duff HR and management not getting the bad pennies out. Limiting the award means an equitable solution won't always be found so leave alone. 1 yr sounds OK unless you're 40+ with dependants

  • rate this

    Comment number 414.

    The UK is covered by EU employment laws and Human Rights legislation.

    They may have trouble taking us back to the Victorian age.

    Also why is it Germany the most powerful economy in Europe they look after it's workers and treat them decently but it doesn't work in the UK.

    Is it to do with the class system in the UK ?

  • rate this

    Comment number 413.

    What about the "employees" who interview great and turn out to be lazy or incompetent."

    One would hope an employer would find that out within the first 2 years and sack them before they become entitled to employment protection. If they can't do that then one could conclude the employer is incompetent.

  • rate this

    Comment number 412.

    403. M Thompson
    We simply have to face facts that business will move elsewhere if they don't like the environment in the UK
    I wish people would stop pedaling this myth, so all these small business'es like hairdressers, shops,pubs,cleaners etc are going to move abroad? Poppycock and nonsense.

  • rate this

    Comment number 411.


    Yes I maybe can help.. If its gutless pandering, and deflecting, any kind of roll over poodle type pap which may maze the eyes of they who eyes can be mazed, then the BBC can, will, and do, always serve it up for the Plebs.. Bastion of Blinkering Communication . I hope that helps..

  • rate this

    Comment number 410.

    401.Big John the Red
    'The quality of managers follows the same pattern: Dutch, German and Japanese are excellent. American and British years behind!'

    That would be partly because of the craze in the 90s for UK companies to have their management courses run by yanks but also coupled with poor choices of person for promotion. The legacy is a load of idiots wanting to 'touch base' etc etc.

  • rate this

    Comment number 409.

    @403 M Thompson

    While I don't disagree with your assessment that some British employers will make threats to take their business elsewhere I fundamentally disagree with any idea that we should just accept that as inevitable and subsequently acquiesce to unreasonable demands. 65mn people cannot -in any universe- compete with 1.4bn. It's irrational to try and a lie to suggest we could.

  • rate this

    Comment number 408.

    Workers should receive more than a footballer or rock star getting damage payments over their reputations which perhaps not much always.

  • Comment number 407.

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

  • rate this

    Comment number 406.

    The phrase 'slashing of red tape' is not politically neutral. It is based on lies and misconceptions. Regulations exist for reasons, usually due to serious injury or manifest injustice. However, many regulations have 'expiry dates': the circumstances which gave rise to them no longer apply. So, there should be a regular pruning. However, we must ensure a balance rights of employees and employers.

  • rate this

    Comment number 405.

    Has he swallowed a wasp or something?

    Whatever - for this person to represent 'liberals' is as laughable as bliar representing 'labour'. One-party GB, led by business.


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