Unions 2, CBI 1

THE GOVERNMENT is prepared to risk the wrath of business leaders by refusing to back down over controversial employment rights proposals, writes Barrie Clement.

Despite protests from the CBI, Peter Mandelson, Secretary of State for Trade and Industry, will push through legislation enforcing recognition of any union where the majority of a workforce are members, the Independent on Sunday has learned.

He will also insist on a law giving employees the right to union representation in individual grievance and disciplinary cases, whether or not the trade union is recognised.

As a gesture towards the employers' views, however, he will introduce an upper limit to compensation for unfair dismissal. The recent "fairness at work" White Paper proposed that there should be no cap on such payments.

Union leaders will be disappointed by his decision on compensation, but most are likely to regard Mr Mandelson's stand as a 2-1 victory for the labour movement.

Ministers insist that no final decisions on the White Paper have yet been made but they will defend the plan to impose a limit on payments for unlawful sacking, by pointing out that for many years the TUC's official policy was that the present pounds 12,000 limit be "uprated".

The CBI wants a pounds 40,000 cap, which it claims is in line with the overall rise in prices and earnings since it was last set in 1979. It believes the "sky's the limit" approach would provoke a massive increase in costly litigation, burdening small and medium-sized companies in particular.