UK Business Secretary unveils plans to cut employment law red tape

Proposals to limit compensation for unfair dismissal and to encourage settlement agreements to end employment relationships have been put forward by the UK government today.

Business Secretary Vince Cable has announced a range of reforms designed to simplify and speed up the process of ending the employment relationship when it breaks down. According to the Department for Business, Innovation and Skills the proposals, which are subject to consultation, are intended to benefit both employers and employees.

Controversial “fire at will” proposals have been abandoned but the law will be changed to ensure that businesses can pay off under-performing employees through a settlement agreement, without fear of future claims. This sort of arrangement between the employer and employee is intended to help resolve disputes and end an employment relationship in a fair and consensual way.

In cases that end up going to an employment tribunal, workers face a reduction in how much compensation they will be able to claim. The consultation proposes to limit payouts to a maximum of 12 months’ salary.

Vince Cable said that the UK already has very flexible labour markets, as evidenced by the fact that more than one million new private sector jobs have been created in the last two years, despite the lack of economic growth. However, he added that the state can do more to help small companies by reducing the burden of employment tribunals and moving to less confrontational dispute resolutions through settlement agreements.

Labour unions are unhappy about the announcement, fearing that it takes away employment rights of ordinary workers. Chris Keates, general secretary of teachers’ union the NASUWT, claimed that the reforms would allow employers to “exploit, bully and discriminate against their workforce”.

Shadow business secretary Chuka Umunna said that the government was “attacking the rights of every employee in this country” and added that ministers “should be making it easier to hire, not easier to fire people”.

A different view was taken by business organisation the British Chambers of Commerce (BCC), whose director of policy, Dr Adam Marshall, said that an unnecessarily antagonistic dismissal process and the possibility of facing malicious tribunal claims has a detrimental effect on employment. The proposals would boost business confidence when firms can see the changes in action, he added.

Broadcast technology firm Timewave rejects offer from Mayfair Capital

UK Timeweave Plc (LON:TMW), a provider of broadcast services to the bookmaking industry, rejected on Friday the GBP0.22 (USD0.36/EUR0.27) a share takeover offer from British investor Joe Lewis’ company Mayfair Capital Investments Limited, advising shareholders not to accept it.

Bahamas-based Mayfair, owner of 29.99% in Timeweave, announced on 6 September a proposal to buy the rest of the company in a deal which would value the target at around GBP49.6m. The offer documents were posted to Timeweave shareholders on 11 September.

Timeweave’s independent directors said they had looked into the merits of the bid and had concluded that it would not serve the best interest of shareholders as it fails to reflect the full value of the company. While the offered price is a premium of some 12.8% to Timeweave’s closing on 5 September, it offers no premium to its 12-month to 5 September volume weighted average price and it is about 5.3% below the 24-month volume weighted average price prior to 5 September.

The independent directors said that the offer could represent a loss of value for shareholders who would accept it compared to the alternative of Timeweave’s strategic plan of seeking further investment opportunities.

Refering to Mayfair’s plans to delist Timeweave at reaching an ownership level of 75%, the company’s directors said that such a move would substantially lower the liquidity and marketability of any Timeweave shares not tendered to the bid.

In its statement from 6 September the buyer said that Timeweave shareholders controlling a combined 15.80% in the company, have pledged to sell their stock to Mayfair, bringing its total interest in the company to 45.79%. The offer is subject to gaining an ownership level of over 50%.

The Timeweave Group owns 50% in Amalgamated Racing Limited, the owner of exclusive licenses with 34 racecourses to broadcast pictures, audio and data from these courses to licensed betting offices in the UK and Ireland. It also holds 49.9% in British TV producer and distributor DCD Media plc (LON:DCD) as well as SportingWins Limited, a firm writing hedging agreements to cover financial risk of corporate clients dependent on the results of professional sports events.

Investec Investment Banking is advising Timeweave in connection with the buyout offer.