The cap that doesn’t fit

Victoria Phillips is head of employment rights at Thompsons Solicitors

The weekly Thompsons Solicitors UnionHome blog


Irrespective of ministerial rhetoric about the need to reduce payouts and the planned cap on unfair dismissal awards, the new limits won’t break anyone’s bank. The figures need to be put into context. The cap on unfair dismissal compensation may rise from £72,300 to £74,200, but last year’s tribunal statistics show that the median award for unfair dismissal cases was just £4,560 (it was £4,591 the previous year) and the average award was £9,133. Just two per cent of cases attracted an award of over £50,000.


Yet the government and business lobby persist on claiming that employers are scared to recruit because businesses are afraid of high awards being made against them. The reality is that the stats completely undermine the government’s claim that a cap is needed to dissuade claimants from bringing so-called weak or vexatious cases. The same applies to the logic for introducing employment tribunal fees.


The rise in other compensation limits is equally stingy. The minimum basic award for unfair dismissal or selection for redundancy on various grounds goes up from £5,300 to £5,500 and the limit on a week’s pay for calculating a redundancy award goes up from £430 to £450. The limit on guarantee payments rises from £23.50 per day to £24.20.


It’s worth noting that the new limits only apply to an event that takes place on or after the date they come into force. So, for someone unfairly dismissed the new rates only apply to dismissals with an effective date of termination on or after 1 February 2013.


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