Government rejects proposal to adopt compulsory no-fault dismissals (“Fire at Will” Plans) but changes are announced.

Business Secretary Vince Cable has announced proposed changes to employment law, following recommendations made in a Government-commissioned report by venture capitalist Adrian Beecroft. He said he was “trying to strike a balance” between helping employers whilst protecting employees.

In an attempt to give businesses more confidence to recruit staff, Mr Cable will announce:

Payouts for unfair dismissal at employment tribunal are to be reduced to one year’s salary or even lower (currently £72,300). The belief is that this will encourage small businesses to start recruiting more staff, as small businesses are currently deterred from taking on staff for fear they could end up with a big bill.

Other proposals to be confirmed include:

Giving tribunal judges authority to review tribunal cases before reaching court to allow them the ability to dismiss weak cases without a hearing and give stronger legal protection to Companies wanting to remove under-performing staff.

Bolstering settlement agreements the business secretary will is backing a voluntary scheme in which employers and staff can sign settlement agreements that would allow an employee to leave a company with a good reference providing they waived their right to pursue unfair dismissal proceedings at a tribunal. The agreements will come into force next summer.

The decision has been made not to implement previous proposal for “no-fault dismissals” Vince Cable said “People would feel intimidated if they knew that they could be fired on the spot without good reason and that is why we have said not to those proposals”.

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