Businesses will ‘tentatively welcome’ unfair dismissal changes – Shakespeares

MIDLANDS businesses will tentatively welcome the Government’s proposed changes to the unfair dismissal claims system, according to employment law experts at law firm Shakespeares.

Paula Whelan, employment law partner at the firm, said: “The proposals set out by the business secretary Vince Cable,should go some way to help re-balance the unfair dismissal claims system, often perceived as being skewed in favour of the employee, without restricting access to justice.

“The current system allows disgruntled employees who have lost their jobs to pursue compensation claims against their former employer of anything up to £72, 300, without incurring any personal costs. Many employers feel that this creates too much incentive for employees and encourages vexatious or spurious claims.”

Among the changes proposed is a move to reduce the cap on compensation awards for unfair dismissal to one year’s salary. If the proposed changes are implemented, employers will also be able to use ‘settlement agreements’, allowing staff to agree to leave the business with a pay-off and no threat of a tribunal case.

Whelan added: “The proposed changes will help to promote prompt discussion between employers and employees, encouraging them to resolve performance-related issues and reducing the incidence of workplace disputes.

“However, it is important that employers don’t over-rely on ‘settlement agreements’, which could lead to a costly chequebook culture when managing the exits of key members of staff.

“Employers should be reminded that they still have the right to address performance issues openly and directly with members of staff and to make dismissals where necessary.”