The measure aim to simplify and speed up the process of terminating employment for the benefit of all parties when the relationship between employee and employer breaks down,

It includes:

• settlement agreements to help end employment relationships in a fair and consensual way. A consultation on how best to make this work in practice starts today and Acas has agreed to provide a new code of practice
• a reduction in the cap on compensation for unfair dismissal claims
• proposals to streamline employment tribunals by making it easier for judges to dismiss weak cases
• responses to its call for evidence on the TUPE rules, when staff transfer to a new employer. Government has heard that businesses want this to be more efficient, and will consult on specific proposals before the end of the year, and
• recommendations on how to improve guidance for small businesses on the Acas code of practice on discipline and grievance.

The Government also responded formally to the call for evidence on proposals for compensated no fault dismissal for micro-firms. Based on the evidence presented by business the Government will not be taking forward the proposal.

The UK has a lightly regulated, flexible labour market that the OECD considers to be amongst the best in the world, behind only USA and Canada. The recent World Economic Forum Global Competitiveness Report cited the flexibility of the UK’s labour market as one of the main reasons for its improvement in the global rankings to 8th from 10th.

Business Secretary Vince Cable said, "We have been looking across the range of employment laws with a view to making it easier for firms to hire staff while protecting basic labour rights.

“Our starting point is that Britain already has very flexible labour markets. That is why well over one million new private sector jobs have been created in the last two years, even when the economy has been flatlining.

“But we acknowledge that more can be done to help small companies by reducing the burden of employment tribunals, which we are reforming, and moving to less confrontational dispute resolutions through settlement agreements."