Business secretary Vince Cable has unveiled a wide-ranging shake-up of employment laws to make it easier for small businesses to hire and fire staff.
In May, the Beecroft report on employment law, authored by venture capitalist Adrian Beecroft, recommended empowering employers to fire staff for any reason with compensation.
However, the Department of Business says there is no evidence this would boost employment and has dismissed the calls.
Instead, Cable is supporting “settlement agreements” meaning employees can leave without going to a tribunal and receive a good reference and payoff in return.
The Advisory Conciliation and Arbitration Service will provide a code of practice for settlement agreements alongside a simultaneous consultation.
The Government is also proposing cutting the cap on compensation for unfair dismissal claims from £72,000 and making it easier for judges to dismiss weak cases at employment tribunals.
The Department of Business also plans to review the Transfer Undertakings (Protection of Employment) rules, which protect employees’ jobs when a business changes owner.
The Government will seek to improve guidance for small businesses on the ACAS code of practice and grievance.
Cable says: “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.”
John Charcol senior technical manager Ray Boulger says: “The concept of these new rules is to give employers more comfort and less risk of being sued, which has to be a sensible approach.”
The rules will come into force next summer.