Bloomberg News

Cable Plans to Make It Easier for U.K. Firms to Fire Staff

November 23, 2011

(Updates with Cable denying “caving in” to pressure from Cameron’s office starting in fifth paragraph.)

Nov. 23 (Bloomberg) -- U.K. Business Secretary Vince Cable plans to make it easier for companies to shed staff, arguing they will be more likely to hire if it’s easier to fire.

Cable said in a speech in London today he will look at allowing employers to have “protected conversations” with under-performing staff or those close to retirement, in which issues can be discussed without the dialogue being raised in legal proceedings later. He will also look at simplifying rules on “compromise agreements,” a form of no-fault dismissal under which workers receive a payoff, and reduced costs for defending unfair-dismissal claims.

“What we want to do is remove the perverse incentive in the current framework that can deter responsible employers from hiring new staff for fear of the cost and difficulty if it doesn’t work out,” Cable said. He said he had to balance that with “the need to provide job security in these uncertain times.”

The government is looking for ways to stimulate an economy at risk of sliding back into recession after growing at barely more than half the pace forecast by the fiscal watchdog in the first nine months of 2011. The Confederation of British Industry said Nov. 20 that business leaders’ confidence in the outlook for the economy had deteriorated.

Beecroft Report

Cable denied his announcement represented a defeat for his department at the hands of Prime Minister David Cameron’s office. Cameron asked Apax Partners Worldwide LLP’s Adrian Beecroft to suggest changes to employment law. That report, which Business Minister Ed Davey said today won’t be published, included a call for more use of compromise agreements.

“Nobody has caved in,” Cable said, when asked about the Beecroft report. “There were quite a lot of completely uncontroversial and sensible deregulatory measures which we adopted. The bit that was most controversial was no-fault dismissal. My view is, ‘where is the evidence that this will help?’ I don’t see it, but we want to find it.”

Brendan Barber, the general secretary of the Trades Union Congress, attacked the plan. “Reducing protection for people at work will not save or create a single job,” he said in an e- mailed statement. “It’s not employment law that is holding firms back, it’s the tough economic climate and the problems many companies are having getting the banks to lend to them that’s to blame.”

--Editors: Eddie Buckle, Andrew Atkinson

To contact the reporter on this story: Robert Hutton in London at;

To contact the editor responsible for this story: James Hertling at

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