High earners who win claims for ordinary unfair dismissal could in future receive unlimited amounts in compensation under plans the UK government is drawing up to lift the current 118,000 limit.
A commitment to lift the cap on compensation was part of a compromise deal with business and unions, under which Labour abandoned a manifesto promise to give workers dismissal protections from the first day in a job.
At the moment, workers can only get the lower of their annual salary or 118,223 if they win a claim for ordinary unfair dismissal. Such claims can usually only be brought after workers have held a job for two years.
The government now intends to remove both caps on compensation for all cases, along with reducing the time period to six months, according to business and union representatives involved in the negotiations.
This would be a “seismic” change, according to Colin Leckey, a partner at the law firm Lewis Silkin.
He said it would “significantly increase the cost and complexity” for employers of agreeing severance packages for high earners because they would have greater leverage to push for big payouts.
In practice, compensation for unfair dismissal awarded by tribunals is usually well below the existing caps, with an average award less than 7,000, according to the latest employment tribunal statistics.
One government figure added that even in particular types of cases where compensation is already uncapped — such as discrimination, whistleblowing, health and...
Donald Trump's claim that Nato troops avoided the front line in Afghanistan has sparked widespread outrage among veterans and their families. Ben Parkinson, a severely injured British paratroope...