Unfair Dismissal Compensation: are compensation limits unfair?

Are Compensation Limits for Unfair Dismissal Unfair?

One of the joys of being an employment solicitor is calculating schedules of loss for claimants in employment tribunal claims; and ‘counter-schedules’ on behalf of employers. Always interesting, claimants include everything possible (as a negotiating ploy, on the principle that ‘if you don’t ask, you don’t get’) and employers challenge everything possible, to reduce their liability. So what are the legal principles?

A successful claimant is entitled to a ‘basic award’, equal to a statutory redundancy payment (unless he or she has already received a statutory redundancy payment) plus a ‘compensatory award’ which is ‘such amount as the tribunal considers just and equitable in all the circumstances, having regard to the loss sustained by the complainant in consequence of the dismissal…’ [section 123(1) Employment Rights Act 1996]

You could write whole books on unfair dismissal compensation (the IDS Handbook on remedies runs to 220 pages). My point here is to ask why an ‘employer-friendly’ coalition Government increased the compensation limits on 1 February?

The maximum basic award went up a whopping 7.5% from £12000 to £12900; and the compensatory award went up (according to the relevant RPI measure) by 5.6% from £68,400 to £72,300. The vast majority of employers cannot afford pay rises on this scale, so why are they paying such increases to redundant and unfairly dismissed staff?

It would be more to the point, to help both claimants and employers dealing with higher claims, if the Government increased the limit of £30000 tax exemption on termination payments. This limit has been static since 1989, when it was worth £60,000 in today’s money.

What do you think?

Geoffrey Bignell, Chairman, Just Employment Solicitors

About Jeremy Nelson-Smith

Jeremy Nelson-Smith is an Internet Marketing expert who works with businesses of all sizes to maximise the quality of website visitors, visitor engagement and conversion to contact or buyer.
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