Sacked workers entitled to unlimited compensation – Daily Business

UK workers will be entitled to unlimited compensation in unfair dismissal claims in a move aimed at quelling disquiet over changes to Labour’s employment rights bill.

Ministers dropped a plan to give workers protection against unfair dismissal from the first day of employment, instead introducing it after six months service.

After a backlash from trade unions and Labour backbenchers the government now want to scrap the £118,000 limit for compensation.

It is thought employers would be less aggressive during probation periods if the cap for fines levied on employers was scrapped.

Business Secretary Peter Kyle is set to lay out changes to the bill when it returns to parliament on Monday, amid concerns that it could delay the bill.

Legal experts cautioned against the move. Dan Pollard, partner in the employment team at Charles Russell Speechlys, said: “Today’s development is frankly bonkers. One of the sensible features of the current scheme is the ability to “buy out” most unfair dismissal claims for £118,223 (or 12 months’ pay if lower).

“With the cap removed, employers will have no choice but to embark upon an extremely time-consuming and bureaucratic process.

“Unless introduced overnight it has the potential to create a bloodbath as employers seek to exit underperforming senior staff ahead of time. Today’s change would undoubtedly make the UK a significantly less attractive place to base staff within Europe.

“In general, given that the measure favours higher paid workers, it is not clear why either the unions or employers would think this a good idea. It may be that the government is “rolling the pitch” ahead of a significant hike to the current £118,000 limit.”

However, Emily Chalkley, who is also a partner in the employment team at Charles Russell Speechlys, said there was a silver lining. “With the removal of the cap on unfair dismissal claims employees may be less inclined to bring spurious discrimination and whistleblowing claims to get round the statutory compensation cap.” 

Andrew Griffith, the shadow business secretary, said: “Moving to unlimited payouts at employment tribunals is the sort of out-of-touch idea which this government seems to specialise in. It would benefit higher-paid workers the most but be a huge burden on the tribunal system and businesses alike.”

The Department for Business and Trade was approached for comment.