British companies will be freed from bureaucratic employment rules to try to boost hiring and aid a stagnant economy, the government said on Wednesday, angering unions who fear that protection for workers could be undermined.
Employers' groups welcomed the plans, which include restricting workers' access to tribunal hearings, but unions said the proposals would not produce a single job and could provide cover for rogue bosses to bully staff.
The government was hacking through the excessive red tape and regulation that stood in the way of job creation, Business Secretary Vince Cable told an employers' conference in London.
Ministers are under pressure to find ways to ways to reignite growth as the number of unemployed hits a 17-year-high and the euro zone crisis threatens to tip the economy into recession.
We want to remove the perverse incentives in current employment framework that can dissuade responsible employers from hiring new staff for fear of the costs and the time incurred if it doesn't work out, Cable said.
Our reforms to employment tribunals, and commitment to reviewing dismissal procedures, will mean that businesses can once again have the confidence to hire the staff they need to grow and thrive, he added.
In a proposal set to meet stiff union opposition, the government would examine the possibility of removing unfair dismissal protections from employees in companies with 10 or fewer staff, Cable said.
This would make it much easier for the smallest employers to lay off workers without fear of being sued for compensation.
The move represents a compromise between Cable's Liberal Democratic party and their larger Conservative coalition partners, who had floated the idea of extending such no-fault dismissals to all employers.
Cable denied he was creating a hire and fire culture, saying that the government wanted to avoid denting job security or consumer confidence at a time of economic uncertainty.
The overhaul of employment rules comes ahead of a statement next week from Conservative Chancellor George Osborne who will detail further growth plans to revive an economy that has barely grown over the last 12 months.
Among the measures outlined by Cable is a plan to cut by a quarter the number of claims taken by workers to employment tribunals by charging a fee for submissions and resolving more disputes in advance through conciliation.
Some 218,000 tribunal claims were submitted last year, a rise of nearly 40 percent over the past three years, of which nearly 50,000 were for unfair dismissal.
The government has already announced a doubling of the qualification period for unfair dismissal to two years' service.
(Editing by Ruth Pitchford)