Business Secretary, Vince Cable has put forward proposals for consultation to limit the amount of compensation that a worker can be awarded at an Employment Tribunal.
The current cap of £72,300 on awards for unfair dismissal is expected to be lowered to a maximum of 12 months’ salary.
Mr Cable wants to give employers certainty that they will not be hit by a high award. It is hoped that the proposed change will encourage businesses to feel more secure with regards to hiring and firing staff, thus stimulating growth and making more jobs available.
Mr Cable is also proposing to streamline tribunals by making it easier for judges to dismiss weak cases.
Mr Cable commented, “Our starting point is that Britain already has flexible labour markets. 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.”
However, Mr Cable’s proposals have met criticism including by the Trade Union Congress, who believe that they ‘let bad companies off lightly and deter victims from pursuing genuine cases.’
It is likely that Employees will still try to claim discrimination, which has uncapped compensation because of European laws, in order to put commercial pressure on Employers and obtain higher payouts.
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