More jobs but fewer rights: A victory for Vince?

By Alex Stevenson

Vince Cable has won the coalition battle over 'no-fault dismissal' but is pushing through a cut in the compensation cap for unfair sackings today.

The business secretary may be encountering flak from within his own party for having spent the summer undermining Nick Clegg, but this week he notched up notable victories on student immigration and the rejection of the no-fault dismissal proposal.

The 'fire at will' no-fault dismissal proposal, originally put forward by ex-Tory donor Adrian Beecroft, does not feature in the package.

Cable's opposition to the idea will have been boosted by deep scepticism from No 10, which pushed Bis to consult on the impact the change would have. A mixed response from business groups has been sufficient to see the idea dropped for good.

Topping the list of a series of changes to employment law designed to encourage firms to hire more staff, Cable's Department for Business, Innovation and Skills (Bis) will cap the compensation available for employees dismissed unfairly at £72,000, however.

Staff will also be given the opportunity to accept a pay-off in return for waiving their right to go to an employment tribunal under the measures.

TUC general secretary Brendan Barber said he was pleased that the "proposal to allow employers to fire employees at whim has been ignored".

But he warned that bad employers would be let off lightly by the other changes in employment rights.

"This will feel like another slap in the face following the government's decision to bring in fees for employment tribunals," he said.

"For all the government's talk that helping businesses to sack poor performing workers will make companies more productive, this is little more than a smokescreen to erode hard won rights."

The Institute for Directors welcomed the changes, arguing they would help firms recruit more staff.

Unemployment figures released earlier this week showed the number of people out of work fell by 7,000 in the three months to July, leaving an unemployment rate of 8.1%.