Cable Reduces Unfair Dismissal Cap

Business secretary Vince Cable announced today that the unfair dismissal cap is to be cut to either 12 months’ pay or a lower, as yet unspecified, amount.

Claimant lawyer Alison Humphrey, employment law solicitor at Russell Jones & Walker, said: “Slashing compensation award limits for unfair dismissal claims is another nail in the coffin for employee justice.
“Together with fees for issuing claims, and raising the eligibility threshold to two years’ service, these changes are likely to be a disincentive to bona fide claimants who have been treated genuinely unfairly.

At the same time, it will likely encourage a raft of other ‘day one rights’ claims, such as discrimination, which may add to complication and expense for employers.
 

“Compensation awards are calculated by reference to what an employee has actually lost as a result of the employer’s wrongdoing, so it in no way represents a windfall for employees. In circumstances where most awards don't reach the limit, it is difficult to see the justification for the move.”
 

Cable dropped an earlier proposal, made in Adrian Beecroft’s report in May, for compulsory no-fault dismissal. Instead, ‘settlement agreements’ could be introduced, under which employers and employees would come to an agreement in accordance with a code of practice to be drawn up by Acas.

Other reforms announced include proposals on how judges can reduce the number of preliminary hearings and dismiss weak cases more easily, and reforms to TUPE, which governs the transfer of teams of employees.
 

Ed Stacey, partner at PwC Legal, which acts for employers, warned the proposals risk increasing the number of discrimination and whistle-blowing claims.
 

“It is likely that the combination of increased fees for launching claims and the proposed reduction in awards for unfair dismissal claims will lead to a reduction in some of the low merit and low value claims,” he said.

“However, there is a risk that it will also incite employees to bolt on claims that remain uncapped such as claims for discrimination or whistle-blowing.”