U.K.’s Cable Rejects ‘No-Fault’ Dismissal Plans Backed by Tories

U.K. Business Secretary Vince Cable rejected a proposal, backed by some Conservatives, to allow very small businesses to fire staff without giving reasons, as he announced a simplification of employment law.

The idea of “no-fault” dismissal was proposed by Apax Partners Worldwide LLP’s Adrian Beecroft, in a report commissioned by Prime Minister David Cameron. It would have allowed employers to pay off staff without justifying their dismissal, as they currently have to do. Beecroft argued it would give businesses the confidence to hire.

Cable, a Liberal Democrat member of Cameron’s coalition government, said such a move would have risked further undermining confidence, hurting an economy struggling to emerge from a double-dip recession. Lawmakers from Cameron’s Conservative Party said it was the sort of “supply-side” measure needed to spur growth.

“We want to have confidence in business that they can hire people, but we want people to go to work knowing that at the end of the day, if they have a very bad relationship, they do have some basic labor rights and protection,” Cable told ITV today.

Instead, he announced a streamlining of the process by which employees can seek redress if they argue they’ve been wrongly dismissed. The cap on compensation may be reduced from its current level of 72,300 pounds ($117,000) and it will be easier for judges to dismiss weak claims.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE