Commenting on the business secretary’s plans to slash unfair dismissal awards and introduce settlement agreements, Victoria Phillips, head of employment rights at Thompsons Solicitors said:

"Vince Cable may claim to have rejected Beecroft’s no fault dismissals, but in reality settlement agreements are little different. They will equip unscrupulous employers to ambush a worker, even bully and cajole them into agreeing to go, without getting advice from their trade union or elsewhere, and the fact of the conversation won’t be able to be referred to in any subsequent unfair dismissal tribunal case. Legally, it will be as if it never happened.

"So if a pressured employee accepts the offer they lose their right to pursue an employment tribunal claim and the chance of a greater level of compensation. And if they don’t, they cannot refer to it as evidence of their employer’s intentions, even though it may be key to showing that they have been unfairly dismissed.

"We await the detail on the unfair dismissal award cap, but they are to be capped at either a year’s pay, or between one and three year’s national annual median earnings (currently £26,000). Assuming the government goes for a year’s cap at £26,000, then someone paid more than that will have their compensation capped at that. Such a move entirely ignores any pension loss, which can often be very significant, penalises the long-term unemployed and those earning above £26,000, and is deeply unjust socially and economically.

"It also risks encouraging higher paid people to add other claims to their unfair dismissal claim in order to recover their losses."