The business secretary's attempt to 'reduce the burden of the employment system and create a more flexible labour market' has been applauded by the British Chambers of Commerce.

The business secretary's attempt to 'reduce the burden of the employment system and create a more flexible labour market' has been applauded by the British Chambers of Commerce (BCC).

Vince Cable has announced measures to give companies more flexibility and confidence in managing their workforce and to reduce employment law red tape, including support for settlement agreements to help end employment relationships in a 'fair and consensual' way.

BCC director of policy Dr Adam Marshall says, 'Dismissal is always a last resort, but is at times necessary to protect a business and other members of staff. The fear of malicious tribunal claims and an unnecessarily antagonistic dismissal process has a chilling effect on employment.'

On settlement agreements, Marshall says, 'In those unfortunate circumstances when businesses have to end the employment relationship, settlement agreements provide a speedy and consensual way to avoid disputes.

'Companies need to be confident that they can offer an employee a settlement to end the relationship without fear of future claims. We support moves by the government to make the process of offering a settlement easier to navigate without paying for specialist advice.'

Marshall adds that the current maximum award for unfair dismissal 'vastly exceeds the reality of most cases', but prevents many employers from seeking justice, and puts many more off hiring all together. 'The upper limit should be reduced and this would significantly increase employers’ confidence to challenge unmeritorious claims and recruit more staff.'

However, Trades Union Congress general secretary Brendan Barber says that reducing payouts for unfair dismissals will 'let bad employers off lightly and deter victims from pursuing genuine cases'.

See also: New measures to discourage vexatious employment claims