Cap on unfair dismissal compensatory award

The government has laid a draft order before parliament which proposes a change to the current limit on compensatory awards in unfair dismissal cases.

The government has laid a draft order before parliament which proposes a change to the current limit on compensatory awards in unfair dismissal cases.

Currently the maximum compensatory award is £74,200 and is increased on 1 February each year.

However, the new cap will be the lower of 52 weeks’ pay or £74,200. 

We anticipate that this change will take effect in July 2013 and will apply to dismissals occurring after that date.

This new approach to assessing unfair dismissal compensation is good news for employers.  It will substantially reduce the potential value of many Claimants’ claims and will also make it much easier for employers to assess financial risk when contemplating dismissing employees.