From 29th July 2013, the Coalition Government has introduced a new Cap on compensation at the Employment Tribunal.
The Bill introduces a provision allowing the Government to vary the statutory limit on unfair dismissal compensation (presently £74,200), to either:
1/ A new limit of between £25,882 (median average earnings) and £77,646 (3 times median average earnings), or
2/ whichever is the lower of the current cap (as stated above), or 12 months’ pay.
This is a major change, as for Unfair Dismissal (the largest amounts of claims), you could potentially claim for up to 2 years for an award, even before 2 years had been reached, so you were being given an award in advance of say not having a job for the 2 years.
This means that unfair dismissal compensation will now be limited to 12 months’ pay or £74,200, whichever is the lower. The Government has been persuaded that a pay-based cap will provide greater certainty for employers and more of a sense of reality for employees.
You are likely to be hardest hit if you are a high earner, because you will reach the cap quicker, but lower paid employees could also be impacted if they are out of work for more than a year after having won a claim.
Employers, should see this as good news, and hopefully it will ensure that the overburnded Tribunal System can now deal with less claims, especially claims which stand no chance of sucess, in which Claimants think that they can get huge settlements out of.
It should also dent (however slightly) the raft of no win no fee solicitors plying their trade and their potential clients with cheque book figures, beyond most peoples wildest avarice.
If you have a genuine claim, and have been treated badly, then you should make a claim and rightly and justly so. However, the Tribunal system has become overburdened and is taking longer and longer to get to each case due to the number of claims which should never make it but do for a variety of reasons.
Again, these statements are not to be considered legal advice, merely updates on changes.