The storm clouds of possible employment law reforms broke at the
end of last week in a flurry of Government announcements. The snow
may be moving on but some of those reforms could be here to
stay.
Cap on compensatory award for unfair
dismissal
The Government has announced that the cap on the compensatory
award for unfair dismissal purposes will change to the lesser
of:
- an overall cap (currently GBP 72,300, increasing to GBP 74,200
on 1 February 2013)
- one year's pay
The Government hopes that a pay based cap would, amongst other
things, create more certainty over the likely total costs for
employers in an unfair dismissal claim. It is likely that the
definition of "pay" will follow the definition currently
contained in the Employment Rights Act 1996 so it would not include
discretionary bonuses and benefits in kind. We await the draft
regulations.
