The High Court has this week dismissed a request for a Judicial Review (JR) challenging the newly introduced cap of one year’s salary in compensation for unfair dismissal.
The revised cap for unfair dismissal compensation applies where the effective date of termination is after 29 July 2013, when the new cap was brought in under the Unfair Dismissal (Variation of the Limit of Compensatory Award) Order 2013, but does not apply to certain automatically unfair dismissals.
Previously, individuals who won their case at a tribunal could claim for three years’ salary, up to a maximum of £74,000, in compensation but the new cap was brought in to address employer concerns that this amount gave employees unrealistic expectations when deciding to pursue a tribunal.
Generally speaking, the cap on compensatory awards is rarely applied and the average size of a claim is £4,832, according to the latest available statistics, so the one year’s salary cap would appear to be about right.
However, those challenging the imposition of the new cap argue that it is wrong, as it is indirectly discriminatory against older people, who were amongst the few who were occasionally awarded more than one year’s salary, due to the increased difficulty they would face in finding another job, and that the Government’s impact assessment is fundamentally flawed.
The case was brought by a London employment firm, which has said it will look at appealing the decision with pro bono help from lawyers. Meanwhile, trade union Unison is also challenging a High Court ruling of earlier this year that rejected a request for a JR of the Government’s decision to introduce tribunal fees.