The Enterprise and Regulatory Reform Bill, outlined in the Queen’s speech, has been presented to Parliament and is due to have its second reading in the House of Commons later today.
Amongst other things, under the Bill employers should find it easier to sack employees if they agree to leave without argument on receipt of a cash settlement. These “settlement agreements” hinge on the employee agreeing the offer and should avoid a number of long and costly tribunals, which employers say are amongst their main reasons for not hiring new staff.
Norman Lamb, Liberal Democrat employment minister said of the agreements: “There are inevitably occasions when the employment relationship doesn’t work out. Employers have to feel confident in dealing with situations such as where an employee isn’t pulling their weight or where someone is unreliable or even guilty of misconduct.
“In these instances it is sometimes in the best interests of both employee and employer to end the relationship speedily by reaching a settlement. An employee leaving by agreement can do so with their dignity intact. The employer secures peace of mind knowing that they will not face expensive tribunal proceedings.”
He added: “We know that many large companies use settlement agreements in this type of situation but we want to ensure that all employers, large and small, can make use of them without incurring large legal fees.”
Despite some critics’ fears that the bill will erode workers’ rights and protection, the business community appears to be largely behind the settlement agreement proposal. Neil Carberry, employment director for the Confederation of British Industry, said: “What the government is doing here is cutting to the chase if any employer thinks this isn’t going to work; it’s voluntary, it protects both sides.”