Proposals announced today by business minister Vince Cable, including a cut in the amount that employees can claim for unfair dismissal payouts, have been heavily criticised.
The Department for Business Innovation and Skills (BIS) launched a consultation today (14 September) on the potential to cap unfair dismissal compensation claims from the current level of £72,300 to a maximum of 12-months’ salary with a reduced upper limit, as part of the package of proposals.
Also launched today is a consultation on the reinstatement of settlement agreements under which staff agree to leave and reach a financial settlement with their employers without having to go to an employment tribunal.
And significantly the controversial "no-fault dismissal" proposals which aimed to simplify the dismissal process for micro-firms and small businesses will not be made law.
Cable said he would also consult on specific proposals surrounding TUPE legislation, before the end of the year, with the aim of making the system more efficient.
The proposals are part of the government’s Employment Law Review, which was launched in 2010 alongside the Red Tape Challenge, which aim to rid business owners of unnecessary bureaucratic procedures and reduce employment law red-tape.
Announcing the package Cable said: "We have been looking across the range of employment laws with a view to making it easier for firms to hire staff while protecting basic labour rights.
"Our starting point is that Britain already has very flexible labour markets. That is why well over one million new private sector jobs have been created in the last two years, even when the economy has been flatlining.
"But 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 through settlement agreements."
But Unite slammed to proposals saying they would increase insecurity and not jobs. General secretary Len McCluskey said Cable had "thrown conservative MPs and ministers a very large bone".
"He admits that there is no benefit in `sacking at will' but his capitulation on workers' tribunal protections is wish fulfilment for the large anti-worker wing of this government.
"This is a government that has not one clue about how to create jobs, but is certainly skilled at spreading insecurity and fear in the workplace.
McCluskey said Unite was "extremely concerned" about the review of TUPE legislation.
He added: "Given the government’s inherent anti-worker bias, we fear that this vital measure, often the only thing protecting vulnerable workers during takeovers, will be axed too.
"UK workers already have the worst protections in Europe. This government is utterly misguided in its belief that making workers more vulnerable will power our economy to recovery.
"Vince Cable should be ashamed for his part in this assault on the rights of the millions of decent working people of this country."
Forum of Private Business chief executive Phil Orford greeted the announcement with caution and said that the government must ensure that this would be the final consultation on dismissal proposals before policies are taken forward.
He added: "If government wants to achieve growth it must allow businesses to adapt themselves as they see fit. Often, staff changes can lead to greater productivity but the hoops businesses currently have to go through to achieve this can be lengthy and damaging to the business. As much as positive changes to tribunal processes have been welcomed, you solve a problem at its source. This is a time for actions, not consultations."