Cable backs capping unfair dismissal payouts

He will also back using settlement agreements, under which staff agree to leave without being able to go to a tribunal, but get a pay-off in return, reports The BBC.

He will also confirm that proposals to make it easier to fire under-performing staff will not be made law.

The “no-fault dismissal” proposals were controversial among Liberal Democrats.

Mr Cable himself opposed it, even though “no-fault dismissals” had the backing of many Conservative MPs and business groups such as the British Chambers of Commerce.

Mr Cable, who will unveil his proposed changes to employment law later, will also consult on plans to change the limit on unfair dismissal payouts to a maximum of 12 months salary.

The recommendations were made in a report, commissioned by Prime Minister David Cameron and compiled by venture capitalist Adrian Beecroft.

The Liberal Democrat minister will announce that the government supports making it quicker and easier to use settlement agreements.

This would act as an alternative to going to an employment tribunal, which can be costly and time-consuming, and, according to businesses, make bosses less inclined to hire new people.

“We are very pleased that Adrian Beecroft’s proposal to allow employers to fire employees at whim has been ignored,” TUC union general secretary Brendan Barber said.

“However, reducing payouts for unfair dismissals will let bad employers off lightly and deter victims from pursuing genuine cases.”

At the time of the Beecroft Report, Mr Cable said the recommendation that “no-fault dismissals” be allowed was “nonsense”, arguing that it was not the job of government to “scare the wits out of people” by reducing their employment rights.

Mr Beecroft responded by calling the business secretary a “socialist” who appeared “to do very little to support business”.