Unfair dismissal payouts capped

Workers will face a cut in how much compensation they can win for unfair dismissal at employment tribunals. The Business Secretary Vince Cable is set to also announce he's dropping plans to make it easier to fire under-performing staff.

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Six percent of axed employees 'are receiving settlements of £30,000'

Department for Business, Innovation and Skills figures show most cases are settled at around £5-6,000 while just 6% receive more than £30,000 and 1-2% receive the maximum payout.

The Lib Dem believes the current cap deters firms, particularly small businesses, from hiring because they fear they could be landed with a big bill.

Also among the reforms are plans to giving judges powers to sift through tribunal cases before they reach court to allow them to dismiss weak cases without the need for a hearing.

Cable to unveil 'settlement agreements' for dismissals

  • Under the proposals if the worker accepts the deal it will become legally protected so it cannot be used later as evidence in any court case or tribunal.
  • Officials insist the move is fair to employees as they are not obliged to take the package and also incentivises bosses to offer a good package, which can include a binding promise of a favourable reference.
  • Mr Cable will also consult on plans to change the limit on unfair dismissal payouts to a maximum of 12 months' salary or set it at an even lower figure.
  • He wants to reduce the current £72,300 cap significantly in the hope of encouraging small businesses to start hiring more staff.

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Government drops no-fault dismissal plans

Business Secretary Vince Cable will announce that "no-fault dismissal" proposals are being dropped after a lack of support for the idea among the business community.

Mr Cable has made no secret of his opposition to the recommendation, which many Tories backed, but aides were keen to stress the proposal was being ditched because there was "no significant evidence" that it would help employers.

The Business Secretary wants to bolster settlement agreements - where employers can offer under-performing employees a pay off - so they become more widely used to resolve disputes.

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