Business Secretary Drops 'Fire At Will' Plans
'No-fault sacking' reforms have been scrapped but bosses will get new powers to fire under-performing workers, Vince Cable has announced.
The Business Secretary unveiled plans that will signal a drastic cut in how much compensation employees can win in unfair dismissal cases.
But company bosses will be given stronger legal protections to get rid of staff not deemed to be meeting required standards under a shake-up of employment laws.
Proposals to introduce "fire at will" reforms - outlined in the David Cameron-commissioned Beecroft Report - are being abandoned after a lack of support for the idea among the business community.
Mr Cable has consistently opposed the plan, which was popular among Tories.
But aides said there was now consensus within the coalition on the move to drop the controversial proposal and stressed it was being ditched because there was "no significant evidence" it would help employers.
Mr Cable said he was "trying to strike a balance" between helping employers and protecting employees.
But unions attacked the shake-up, claiming the employment law reforms would allow company bosses to "exploit and bully" workers.
Chris Keates, general secretary of the NASUWT, said: "Whilst the 'fire at will' proposal has been watered down, the remaining proposals represent an unprecedented and unacceptable attack on the employment rights of teachers and other ordinary working people.
"The Liberal Democrats should be ashamed to be associated with the introduction of measures which give employers licence to exploit, bully and discriminate against their workforce.
"However the Coalition seeks to spin this announcement, this emphasises the contempt for working people which pervades the Coalition's policies."
Brendan Barber, general secretary of the TUC welcomed the move to scrap the proposal "to allow employers to fire employees at whim", but said reducing payouts for unfair dismissals would deter victims from pursuing genuine cases.
Mr Cable told Sky News: "We are trying to strike a balance here ... without creating large-scale insecurity in the labour force and undermining basic employer rights ... and I think we have got the balance right.
"We do respect and want to reserve basic worker rights. We very firmly rejected some proposals which came forward for a kind of 'hire and fire' culture.
"At the same time we want to make it easier for small and medium-sized companies to hire staff without the worry of getting into very legalistic, costly and time-consuming tribunal systems.
"Where we do have disputes and dismissal procedures, to try and deal with it outside of courts and try to deal with it through conciliation wherever possible, through settlement agreements on a voluntary basis, and generally make it easier to hire people - which is what we want to do when there is a lot of unemployment."
Mr Cable wants to bolster settlement agreements - where employers can offer under-performing employees a pay off - so they become more widely used to resolve disputes.
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.
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.
Chuka Umunna, the shadow business secretary, told Sky News: "What we actually want to see the Government doing is making it far easier to hire people than to fire people ... by giving small and medium-size businesses a national insurance (NI) break when they take on extra workers.
"But tampering with people's fundamental, basic human rights to be treated in a fair and decent manner by the people that they work very hard for is not the way to go to get this economy out of the recession the Government has triggered with its failing economic policies."
Vince Cable Defends Texts To Ed Miliband
Cable Plans Business Bank To Help Small Firms