But fire-at-will not included in tribunal reforms
The cap for unfair dismissal awards could be reduced to one year’s salary under employment tribunal changes outlined by the government today.
Business secretary Vince Cable said the proposal was going out to consultation, as part of changes that will also see the tribunal system streamlined and judges given more power to throw out weak cases.
The compensation limit for a successful unfair dismissal claim is currently £72,300.
The government has also given its backing to settlement agreements, under which staff agree to leave their employer with a pay-off and no threat of a tribunal case.
Acas have agreed to provide a new code of practice in this area and businesses will be consulted on the move’s implementation, along with recommendations to change TUPE regulations.
But the government has confirmed that it will not be introducing laws to allow compensated no fault dismissal.
Cable said that the reforms would reduce bureaucracy for firms and increase their hiring confidence.
“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,” Cable explained.
“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."
The government’s intentions were broadly welcomed by UK business groups.
“The fear of malicious tribunal claims and an unnecessarily antagonistic dismissal process has a chilling effect on employment,” said Adam Marshall, director of policy at the British Chambers of Commerce.
“We would urge the government to move swiftly from consultation to implementation on settlement agreements and lower tribunal awards, as these proposals will boost confidence when businesses on the ground can see them in action.”
But while trade unions welcomed the decision not to implement the controversial ‘fire at will’ proposals recommended by the Beecroft Review, they warned that the changes would make it easier for unscrupulous employers to mistreat staff.
“Reducing payouts for unfair dismissals will let bad employers off lightly and deter victims from pursuing genuine cases,” said TUC general secretary Brendan Barber, adding that the move would fail to kick-start the economy.
The government has already doubled the length of service required for an employee to make an unfair dismissal claim from 12 months to two years.
However, legal experts suggested that reducing the cap for unfair dismissal payments could have little practical impact, as compensation rarely came close to the £72,300 limit.
In reality, only 6 per cent of claims resulted in awards of more than £30,000, said James Cox, partner at law firm Gibson Dunn & Crutcher.
“It is not uncommon for an employee to reject a sensible settlement offer from their former employer only to lose their claim at tribunal or recover less by way of compensation than was offered in settlement,” he explained. “This is not only a tragedy for the employee concerned but often results in thousands of pounds of wasted costs for the employer.”
Article source: http://www.peoplemanagement.co.uk/pm/articles/2012/09/unfair-dismissal-pay-outs-to-be-cut-says-cable.htm?utm_medium=email&utm_source=cipd&utm_campaign=pmdaily_140912&utm_content=news_1
Byline: Michelle Stevens
Business secretary Vince Cable said the proposal was going out to consultation, as part of changes that will also see the tribunal system streamlined and judges given more power to throw out weak cases.
The compensation limit for a successful unfair dismissal claim is currently £72,300.
The government has also given its backing to settlement agreements, under which staff agree to leave their employer with a pay-off and no threat of a tribunal case.
Acas have agreed to provide a new code of practice in this area and businesses will be consulted on the move’s implementation, along with recommendations to change TUPE regulations.
But the government has confirmed that it will not be introducing laws to allow compensated no fault dismissal.
Cable said that the reforms would reduce bureaucracy for firms and increase their hiring confidence.
“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,” Cable explained.
“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."
The government’s intentions were broadly welcomed by UK business groups.
“The fear of malicious tribunal claims and an unnecessarily antagonistic dismissal process has a chilling effect on employment,” said Adam Marshall, director of policy at the British Chambers of Commerce.
“We would urge the government to move swiftly from consultation to implementation on settlement agreements and lower tribunal awards, as these proposals will boost confidence when businesses on the ground can see them in action.”
But while trade unions welcomed the decision not to implement the controversial ‘fire at will’ proposals recommended by the Beecroft Review, they warned that the changes would make it easier for unscrupulous employers to mistreat staff.
“Reducing payouts for unfair dismissals will let bad employers off lightly and deter victims from pursuing genuine cases,” said TUC general secretary Brendan Barber, adding that the move would fail to kick-start the economy.
The government has already doubled the length of service required for an employee to make an unfair dismissal claim from 12 months to two years.
However, legal experts suggested that reducing the cap for unfair dismissal payments could have little practical impact, as compensation rarely came close to the £72,300 limit.
In reality, only 6 per cent of claims resulted in awards of more than £30,000, said James Cox, partner at law firm Gibson Dunn & Crutcher.
“It is not uncommon for an employee to reject a sensible settlement offer from their former employer only to lose their claim at tribunal or recover less by way of compensation than was offered in settlement,” he explained. “This is not only a tragedy for the employee concerned but often results in thousands of pounds of wasted costs for the employer.”
Article source: http://www.peoplemanagement.co.uk/pm/articles/2012/09/unfair-dismissal-pay-outs-to-be-cut-says-cable.htm?utm_medium=email&utm_source=cipd&utm_campaign=pmdaily_140912&utm_content=news_1
Byline: Michelle Stevens
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