The government-commissioned Beecroft report, which proposed compensated no-fault dismissal as a way of liberalising the UK’s employment laws, had come under stinging criticism from trade unions and human resources groups such as the Chartered Institute of Personnel and Development.
Cable himself slammed the proposal as “complete nonsense” in late May, and last night outlined an alternative designed to liberalise the UK’s red tape and boost growth, while also protecting workers’ rights.
“Settlement agreements are smart, fair and pro-business reforms,” Cable said. “It empowers employers by enabling them to keep their workforce flexible and encouraging alternative ways of solving workplace problems rather than resorting to a tribunal.”
Under the plan an employer will be able to offer a settlement to a member of staff that they wish to move on, without the offer being held against them at a subsequent tribunal, should the dispute escalate.
“Employees will also continue to enjoy full protection of their employment rights, as they can choose to reject the offer of a settlement agreement and proceed to a tribunal,” Cable’s department for business, innovation and skills (BIS) said.
The government hopes to encourage more cases to be resolved prior to tribunal, arguing that “a sensible compromise can be reached in the majority of cases”.
Cable’s settlement agreements were welcomed by business group the CBI last night yet some law firms specialising in the area remained sceptical.
“I can’t see how the emphasis on settlement agreements is going to either de-regulate the employment field or encourage growth in business,” said Esther Smith, a partner at Thomas Eggar. “It is commonly the prospect of paying out compensation to underperforming employees, rather than the ability to broker a discussion with them, that deters smaller employers from instigating such discussions.”