Successful claimants for unfair dismissal could receive unlimited amounts in compensation, according to new government plans.
The Department for Business and Trade yesterday revealed that it would scrap a measure in the Employment Rights Bill to give staff the right to bring a claim for unfair dismissal from the first day of their employment. It said that following discussions with trade unions and business representatives, that proposal has been revised so the qualifying period will be six months, down from the current 24 months. Existing one-day protection against discrimination will remain in place.
The departmental announcement also states that the proposed qualifying period can be varied in future only by primary legislation - effectively making it harder for a future government to reverse.
While the 'day one' row has attracted most of the headlines, the government also revealed plans to lift the compensation cap. Currently, claimants are limited to receiving no more than a year’s gross pay which cannot be more than £118,223 if they were dismissed on or after 6 April 2024 (the figure is £115,115 for anyone dismissed in the 12 months previously).
It is not clear at this stage whether ‘lifting’ the cap would mean removing any restriction on compensation, as currently is the case in discrimination or whistleblowing claims, or taking away the one-year caveat. Removing any limit on how much compensation could be awarded could result in senior executives on high salaries being more likely to bring claims for unfair dismissal.
When the previous government consulted on employment rights, it considered the cap was too high and may have led to unrealistic expectations among both employees and employers as to the likely level of a tribunal award. These expectations may also have had a negative impact on hiring, as employers who felt they may be liable for very large amounts were more reluctant to take on new staff.
The amendments to the Employment Rights Bill are likely to mean the legislation will pass through the House of Lords, although there is no indication yet when the reforms would come into effect.
No comments yet