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Vince Cable announces employment law reform consultation

Vince Cable has today set out a package of proposed employment reforms which include:-

Cap on unfair dismissal awards

The Government is consulting about the potential for reducing the unfair dismissal compensation cap, currently at £72,300, to an as yet unspecified lower figure, or to an individual’s annual net salary where this is less than the new proposed cap. The rationale behind this is that the Government is concerned that the current unfair dismissal cap of £72,300 is too high, and deters employers from recruiting staff.

“Settlement agreements”

The same consultation paper focusses on greater use of what the Government refers to as settlement agreements, a form of compromise agreement. Amongst the proposals is a proposal that any settlement package offered to an employee under the terms of a settlement agreement will not be admissible as evidence in unfair dismissal cases, even where there is no dispute between the parties when the offer is made. Under the current law settlement discussions where no dispute exists are not covered by the without prejudice principle. The paper goes as far as appending a proposed standard template settlement agreement.

Further streamlining of employment tribunals

Following on from Justice Underhill’s recent review, a separate consultation commences today which includes proposals on how judges could dismiss weak cases more easily and reduce the number of preliminary hearings scheduled.

The Government has confirmed that it will not be taking forward the compensated no-fault dismissal proposals previously advanced by venture capitalist Adrian Beecroft.

The consultation documents can be found here. The consultation period is due to close on 23 November 2012.

I would be interested to hear whether you think that these proposals, if they become law, will make things simpler for you or your organisation, or whether you think that ultimately this won’t materially change the manner in which you deal with workplace issues on the ground.

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