Government proposal to "streamline employment law" announced


On 14 September 2012, Business Secretary Vince Cable announced a package of proposed employment law reforms designed to give businesses more flexibility by reducing ‘red tape’.


The Government has proposed consultations on the following topics:

Reducing the cap on compensation for unfair dismissal claims - The cap is currently at £72,300. The Government’s two proposals are a cap of up to twelve months’ pay, and a new reduced upper limit.
Settlement Agreements - The Government has announced its support for settlement agreements to help bring a consensual end to employment relationships without the need to go to an Employment Tribunal. A consultation on how these agreements will work in practice started on 14 September. The consultation provides a template letter and guidance on how the parties would reach agreement. ACAS has agreed to provide a new code of practice on this.
Streamlining employment tribunals - Following on from Justice Underhill’s review of tribunal rules, a consultation started on 14 September.
Responses to call for evidence on TUPE Regulations - The Government has given a summary of responses to its call for evidence on the TUPE regulations, which show that businesses want TUPE rules to be “more efficient”. The Government will consult on specific proposals before the end of the year.

Response to no-fault dismissals

The Government responded formally to the call for evidence on proposals for compensated no-fault dismissals for small businesses, announcing it will not be taking forward this proposal, based on the evidence presented by business. However, it will work with ACAS to improve guidance for small businesses on their code of practice on discipline and grievance.


The UK is already one of the most lightly regulated employment markets in the world, but the current Government is committed to further cutting regulation to ease the burden on businesses in the current economic climate. This was evidenced earlier last week by Vince Cable’s announcement that the Government plans to exempt thousands of businesses from health and safety regulations, and is set to continue with these consultations on the Government’s proposals.