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The CBI has commented on changes to workplace dispute settlements and TUPE regulations, announced by Employment Relations Minister Jo Swinson.

The measures include:

- a 12 month pay cap on the compensatory award for unfair dismissal to give employers more certainty about their potential liability. There were 46,300 unfair dismissal claims in 2011/12 and the average award is £5,000. The average UK salary is £26,500;

- consult on how the proposed Early Conciliation (EC) will operate in practice to encourage the use of settlement agreements to avoid the costs and stresses of a tribunal case; and

- consult on proposals to reduce Transfer of Undertakings (Protection of Employment) or TUPE burdens on business - protecting fairness to employee when they transfer to a new employer.

On capping unfair dismissal awards and early settlement of disputes

Neil Carberry, CBI Director of Employment and Skills said:

“Delays in the current tribunal system are the single biggest confidence killer for firms wanting to grow. No one wants disputes to end in tribunals, particularly small businesses, so the system needs to promote early settlement more actively.

“The current cap on unfair dismissal payouts is many times higher than the average sums awarded, giving workers unrealistic and inflated expectations of what a claim is worth. It’s right that the new cap is linked more explicitly to an employee’s earnings. This will give businesses clarity about the potential costs and will scrap the perverse incentive for workers not to settle in the hope of getting a higher award.

“Support from ACAS to settle disputes before the legal process takes over is the right thing to do. Encouraging this gives both businesses and employees a clear nudge to settle early and avoid cost and time on both sides."

On TUPE reform

Mr Carberry said:

“It’s right that workers should be protected when they transfer to a new employer but the current rules are needlessly prescriptive, unclear and go far beyond EU requirements. We’ve long argued for a radical simplification to avoid situations where staff do the same job but have completely different pay, leave, working hours and pensions. Such complexity dampens business innovation and growth,  which we can ill afford when the economy is struggling.”

Notes to Editors:

The CBI is the UK's leading business organisation, speaking for some 240,000 businesses that together employ around a third of the private sector workforce. With offices across the UK as well as representation in Brussels, Washington, Beijing and Delhi the CBI communicates the British business voice around the world.

Media Contact:

CBI Press Office on 020 7395 8239, or out of hours pager on 07623 977854, email: press.office@cbi.org.uk. Follow the CBI (@cbitweets) on Twitter.