Unlimited compensation for unfair dismissal

On Friday the Government published a surprising amendment to the Employment Rights Bill that would remove the cap on the compensatory award for unfair dismissal. 

This means abolishing the 52 weeks’ limitation on loss of earnings. It also means removal of the statutory cap (currently £118,223). 

This seismic change would allow claimants to obtain unlimited financial compensation following a successful unfair dismissal claim. Much like discrimination and whistleblowing claims, for which there is already no upper limit. It will also make it harder to resolve and settle disputes outside of the Tribunal process. Particularly if the prospective claimant is a high earner, or those who may find it harder to mitigate their loss. 

Coupled with the reduced qualifying period for protection from unfair dismissal, from 2 years down to 6 months, this change is certainly likely to lead to an increased number of Employment Tribunal claims. 

Although a hotly talked about, this proposed amendment is not yet law. Alongside other outstanding amendments, it will be debated today before the House of commons and by the House of Lords later this week. In the meantime, we will be closely monitoring this development.

If you have any questions about the Employment Rights Bill, or for more information on how we can support you to support your employees, please contact the Employment Team.