On Friday 20th September, Vince Cable set out the coalition’s vision for employment law reform. And it wasn’t too pretty for employees. The headline news that worried most is that the maximum statutory unfair dismissal compensation of £72,300 is to be cut with a replacement that is the lower of either an individual’s annual net salary or the national median average earnings. That average is presently £26,000, although ministers – not parliament – will be able to increase this average by a multiplier of two or three. Not many presently expect this to happen though as the Conservatives in particular, seem intent on putting workers rights on the back burner.  If you are a high earner or out of work for a lengthy period of time the proposed reduction could affect you.

There will also be the introduction of fees before you are able to lodge a claim in the employment tribunal, and this will typically be £250 for an unfair dismissal claim. Further payments will need to be made along the way (including when the case is listed for hearing when £950 will have to be paid). Such payments are likely to depend on your financial circumstances and you may get the fees back if you win, but it is nevertheless an outlay for some that could make some think twice before seeking justice against their employers- and this will doubtless in turn make businesses happy.

The better news for employees is that the no fault dismissal proposals giving employers the right to “fire at will” underperforming staff without have been dropped. These were originally advanced by Adrian Beecroft in a report commissioned by the government last year, and meant that such employees would not be able to make a claim for unfair dismissal. The plans were hugely unpopular, however, and most firms in any event thought that the provisions were not beneficial to them unless they also applied to employees making discrimination claims-which they did not. It was intended to apply to micro firms only (those with fewer than 10 staff).

Instead, it seems, the government will encourage the use of settlement agreements between employers and their staff, enabling your employer to have an open discussion with you about your under performance and to be able to make you an offer of settlement to leave your job.  Such a discussion will be able to be made without your being able to refer to it at a later tribunal hearing. The settlement discussions would be able to be instigated without any previous performance process having being implemented. At present if such a discussion was started without any prior process, you would have the right to refer to the offer at tribunal as evidence of your employer’s wrongdoing and keenness to get you out. This would be hugely beneficial to your claim. It nevertheless will be a voluntary scheme and any underperforming individual would not be obliged to entertain such discussions or agree to a settlement. Both parties will simply have the option.

The following measures are also due to be introduced:

•           Tribunals are to be streamlined to make it easier for judges to dismiss weak cases at an early stage.

•           The government intends to work with conciliation service Acas to simplify its guidance on disciplinary and grievance matters which small companies supposedly find confusing.

The government may improve existing guidance on the laws relating to TUPE (where the business you work for is taken over with the transfer of employees).

The above proposals are still in the consultation stage and so there may still be some modifications. But there is little doubt the measure to reduce the statutory compensation cap does represent a further erosion of workers’ rights in the UK. The proposals follow an increase in the qualifying period for making a claim to the employment tribunal from one year to two on 6th April 2012.

After the new measures are introduced, you will still have employment rights. It is just that the hurdles will be more difficult to jump through to achieve them. As always, it is best to obtain professional advice to ensure that your rights are maximised.