Chancellor George Osborne is reported to be considering a relaxation of employment protection legislation in order to stimulate business growth, and is under pressure to do so in next month's Budget.
According to a report in today's Independent, Conservative MPs are keen for Osborne to unveil a "go for growth" package in his Budget on 21 March, although the report suggests this could prompt an argument with Liberal Democrats, including Deputy Prime Minister Nick Clegg and business secretary Vince Cable, who would prefer to see workers' existing rights protected.
The news resurrects last year's row over a government-commissioned report by venture capitalist Adrian Beecroft, which suggested that employers should be able to sack poorly-performing staff more easily.
Beecroft's report had laid out plans for no-fault dismissals, which were rejected by the Government in favour of so-called "protected conversations", under which employers would be free to speak to employees about poor performance without the content of those conversations being used later in an employment tribunal.
The Independent suggests that Osborne and recently appointed business minister Norman Lamb are to issue a "call for evidence" on a watered-down version of the Beecroft report, which will offer relaxed rules to employers with fewer than 10 employees.
The move is unlikely to be palatable to those MPs opposed to a relaxation of existing employment rights, while at the same time it does not go far enough to appease the likes of former defence secretary Liam Fox, who yesterday claimed that "it is intellectually unsustainable to believe that workplace rights should remain untouchable while output and employment are clearly cyclical".
The report has also prompted some commentators to question the feasibility of relaxing workers' rights. John Read, employment law editor at XpertHR, said: "Although there is a lack of detail about the reported proposals, I find the suggestion that small employers should be able to sack employees with impunity disturbing.
"The bargaining position between an employer and its employees is far from equal, and employees were given protection from unfair dismissal for a reason. The extension of the qualifying period for unfair dismissal to two years is a major change in itself. All the noise seems to be about dealing with poorly-performing employees, but all employers have to do to dismiss them - or any other employee - is act reasonably.
"That shouldn't be beyond even the smallest employer. Allowing small employers to 'fire at will' would lead to employers sacking people unreasonably, and I don't see how that will help business growth at all; it is a political move.
"The potential problems regarding 'protected conversations' are well-documented by commentators, and similar concerns would apply to the reported option involving Acas, a letter and a severance payment. For example, the employee might be entitled to reject the offer, but is that a realistic outcome when he knows the employer wants rid of him? And that's quite apart from the problematic legal issues."
For in-depth analysis of the Government's previously proposed changes to employment law, see XpertHR.