The Government has decided not to go ahead with controversial proposals for no-fault dismissals, but it has opted to cut the amount workers can win from employment tribunals.
The Government outlined new measures on which it is consulting which it says aim to improve employers’ flexibility. They include a cap on payouts for unfair dismissal to a year’s pay, an emphasis on settlement agreements to avoid costly litigation and a reduction in the minimum time for redundancy consultations from 90 days to 30.
However, the Chartered Institute for Personnel and Development warned that it is crucial that the new measures are not used in such a way as to undermine mutual trust and confidence in the workplace between employers and employees.
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.”
He added: “It is not clear how much of an impact the reduction in the limits to payouts for unfair dismissal will have. The average award for unfair dismissal in 2010-11 was about £9,000, well below the average earnings of most people. Furthermore, employers need to be aware that this cap will not apply to claims brought against them in discrimination cases, where the cap on payouts is unlimited.”
The CIPD supports the reduction in the minimum time for redundancy consultations and says it will “give employers greater flexibility in terms of managing the redundancy process”. Emmott said: “An employer’s ability to respond swiftly to changing market requirements is a key element of the UK’s flexible labour market. Furthermore, employees themselves may sometimes prefer a shorter period of consultation, when it is clear that redundancies cannot be avoided, as this may help to minimise periods of uncertainty surrounding their future.”