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Cable sacks Beecroft's no-fault dismissal concept

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Business secretary Vince Cable is to announce later today the Government’s response to the Beecroft report on employment law reform, published by venture capitalist Adrian Beecroft in May. Although the minister is set to accept 80% of the Beecroft recommendations, the Government will not take up its central plank, that employers should be empowered to introduce no-fault dismissals, or, as its opponents called it, ‘fire at will’.

The Conservative party saw this as a key proposal, but many of its Liberal Democrat colleagues in the coalition government, including Cable himself, were opposed to it.

The Government’s decision to put Adrian Beecroft’s controversial proposals for no-fault dismissal on the policy bonfire was warmly welcomed today by the Chartered Institute of Personnel and Development (CIPD).

Mike Emmott, employee relations adviser at CIPD, said: “The idea that businesses should be able to manage the performance of their employees effectively, without fearing extortionate costs and a time-consuming process, is a good one. However, the proposed reforms must not undermine the principle of mutual trust and confidence that lies at the heart of positive and productive employment relations.”

The business secretary is to announce that workers will face a cut in how much they can win for unfair dismissal at employment tribunals. The maximum £72,000 compensation cap for unfair dismissal is to be slashed as part of a package of measures designed to remove disincentives from employers to take on new staff.

The new cap may be set at the employee's annual salary, or another lower figure. Vince Cable, the business secretary, thinks the current maximum – though awarded in only 1% or 2% of cases a year – deters employers from hiring staff. The current median award is only £5,000 to £6,000, with just 6% of cases leading to awards over £30,000.

He will also back using settlement agreements, under which staff agree to leave without being able to go to a tribunal, but get a pay-off and a good reference in return. This would act as an alternative to going to an employment tribunal, which can be costly and time-consuming, and, according to businesses, make bosses less inclined to hire new people. The agreements are due to come into force next summer.

"We are very pleased that Adrian Beecroft's proposal to allow employers to fire employees at whim has been ignored," TUC union general secretary Brendan Barber said. "However, reducing payouts for unfair dismissals will let bad employers off lightly and deter victims from pursuing genuine cases."

At the time of the Beecroft Report, Cable said the recommendation that no-fault dismissals be allowed was "nonsense", arguing that it was not the job of government to "scare the wits out of people" by reducing their employment rights. Beecroft responded by calling the business secretary a "socialist" who appeared "to do very little to support business".

Cable will also announce the start of a consultation on how to amend the complex Transfer of Undertakings (Protection of Employment) (TUPE) regulations, which protect employees when a business is transferred from one undertaking to another.

The CIPD supported a reduction in the minimum time for redundancy consultations from 90 days to 30, to give employers greater flexibility in terms of managing the redundancy process.

Meanwhile, according to the Daily Mail, a survey of Government ministries found that Vince Cable's department had the worse deals on its provisions contracts, despite its role advising businesses on becoming more efficient. Bis pays the top price of £110 per megawatt hour for its energy compared with the Home Office, which pays just £90 for the same amount. Similarly, 2,500 sheets of paper costs Bis £12.43 while the Department for Energy and Climate Change (Decc) pays just £11.81, according to research by the TaxPayers' Alliance.