Under the proposal, businesses will be able to suspend their employees’ work contracts for up to six months before offering them the opportunity to take redundancy.
This would see such workers receiving an income twice that of Jobseeker’s Allowance as half will come from their employer and the remaining part from the government.
Commenting on the proposal, John Cridland, the CBI’s deputy director general, said the plans could save jobs but should not be seen as a way of allowing firms to start "ducking" from their responsibilities.
However, the scheme has been met with criticism from the Trade Union Congress (TUC).
TUC general secretary Brendan Barber stated: "There will be worries about whether employees who took up this option could end up losing redundancy rights and the big cut in income they will face, without any cushioning redundancy pay for the first six months."
