Nick Clegg today said he never supported controversial proposals to make it easier for businesses to fire workers.
The Lib Dem leader made his comments one day after Business Secretary Vince Cable called the plans, contained in a report by venture capitalist Adrian Beecroft "complete nonsense".
Deputy Prime Minister Mr Clegg said there is no evidence that creating "industrial-scale insecurity" among workers will help secure new jobs.
His comments are likely to fuel divisions within the Coalition.
Speaking at a Sutton Trust conference on social mobility in central London today, Mr Clegg said: "I don't support them and I never have. I've not seen any evidence that creating industrial-scale insecurity amongst millions of workers is a way of securing new jobs.
"So far, there's just no evidence that in the highly flexible labour market that we have, comparatively speaking, for instilling greater insecurity and let's be blunt, fear, amongst workers, at a time of great economic anxiety as a way of fostering new employment."
The reforms urged by Conservative Party donor Mr Beecroft in his 15-page report are believed to include an end to a mandatory 90-day consultation period when a company is considering redundancy programmes. Instead he will suggest a 30-day period and an emergency five-day period if a company is in severe distress.
He also suggests a cap on loss of earnings compensation for employees who make successful unfair dismissal claims. Payments can often total hundreds of thousands of pounds.
Major reform of the rights that workers are allowed to "carry" to new employers when they are the subject of a takeover are also proposed. The transfer of undertakings (TUPE) rights can currently create major disparities between workers within companies.
The Beecroft report also suggests:
- Scrapping provisions in the Equality Act which make employers liable for claims from employees for "third party harassment" - for example, customers making "sexist" comments to staff in a restaurant.
- Shifting responsibility for checking foreign workers' eligibility to work in the UK from employers to the Border Agency or the Home Office.
