Cable reforms ‘charter for bullying bosses’ say unions

The Business Secretary confirmed that controversial “fire at will” proposals have been abandoned but firms are to be given stronger legal protections to pay off under-performing staff.

Workers also face a drastic cut in how much compensation they can win in unfair dismissal cases as part of the shake-up aimed at getting businesses hiring again.

Chris Keates, general secretary of the NASUWT, said: “Whilst the ‘fire at will’ proposal has been watered down, the remaining proposals represent an unprecedented and unacceptable attack on the employment rights of teachers and other ordinary working people.

“The Liberal Democrats should be ashamed to be associated with the introduction of measures which give employers licence to exploit, bully and discriminate against their workforce.

“However the coalition seeks to spin this announcement, this emphasises the contempt for working people which pervades the coalition’s policies.”

Mr Cable confirmed that “no-fault dismissal” proposals made in the David Cameron-commissioned Beecroft Report are being dropped after a lack of support for the idea among the business community.

The Liberal Democrat has made no secret of his opposition to the recommendation, which many Tories backed, but aides were keen to stress the controversial proposal was being ditched because there was “no significant evidence” that it would help employers and insisted Conservative as well as Lib Dem Ministers were behind the move.

The Business Secretary wants to bolster settlement agreements – where employers can offer under-performing employees a pay off – so they become more widely used to resolve disputes.

Under the proposals if the worker accepts the deal it will become legally protected so it cannot be used later as evidence in any court case or tribunal.

Officials insist the move is fair to employees as they are not obliged to take the offer and also incentivises bosses to come up with a good package, which can include a binding promise of a favourable reference.

Mr Cable will also consult on plans to change the limit on unfair dismissal payouts to a maximum of 12 months’ salary or set it at an even lower figure. He wants to reduce the current £72,300 cap significantly in the hope of encouraging small businesses to start hiring more staff.

Department for Business, Innovation and Skills’ figures show most cases are settled at around £5,000-£6,000.

Paul Kenny, GMB general secretary, said: “The steps being taken here by Government, and the ‘noises off’ about it being easier to sack people, will have a much more profound effect on workers than employers. It will increase feelings of job insecurity and reduce the confidence of workers as consumers to commit to spending.”