Get in touch

Coalition government propose employment law reforms

Coalition government propose employment law reforms

Business secretary Vince Cable has announced proposed employment law reforms which include radically decreasing the compensation pay-out for unfair dismissals and the introduction of fees to launch a claim in court.

Unfair dismissal compensation claims are to be slashed under measures which the government hopes will help improve the British economy by making it easier for firms to hire and fire employees. The maximum statutory unfair dismissal compensation currently stands at £72,300, however this is to be drastically reduced if the proposals are approved.

It is proposed that fired employees will have to pay to lodge a claim in the employment tribunal. It is further proposed that the unfair dismissal claim itself will cost £250 to issue and further payments of up to £950 will have to be paid in order to get a hearing date. Tribunals are also set to be streamlined to make it easier for judges to dismiss weak cases at an early stage.

Earlier discussions regarding allowing employers to dismiss underperforming staff without any prior process have been dropped. Instead, the government will encourage the use of alternative dispute resolutions to enable former staff and employers to come to an agreement without going to the employment tribunal. Firms will be allowed to dismiss staff with a negotiated payoff, which the individual is not obliged to accept, but if accepted, closes the door to any future claims.

There have been criticisms that reducing the statutory compensation cap is further reducing the basic rights of employees and strengthening that of employers.

All of these proposals are still in the consultation stage. If they are implemented in the statute books it will be interesting to see whether they have the desired effect to encourage employers to hire new staff and make it easier to resolve disputes.