Should the Government Cap Discrimination Awards?

The Independent reported yesterday that an “influential” group of City figures was urging the government to restrict compensation payments in discrimination cases to £50,000.  Currently such awards are unlimited in size, unlike in unfair dismissal cases where the compensatory award is (currently) capped at £68,400.  I have never understood the rationale behind one being restricted and not the other: why should unfair dismissal awards be capped and not those in discrimination cases? Or, conversely why shouldn’t unfair dismissal awards be uncapped?

The answer to both questions is politics and Europe.  Employment law is a football to be kicked around by the government of the day and what gets enacted as legislation depends on the colour of the government in power at the time and by what is allowable under European law and regulation.  At the moment employment law is taking a leathering with the government consulting on reforms to both law and procedure. The consensus amongst many commentators (and businesses) seems to be that there is not much more to this than words.  The “Employers Charter” launched in January was underwhelming and the announcement of the extension of the government’s review of employment announced last month to consider restricting discrimination awards, and whether the TUPE regulations do more than required by European legislation looks like little more than window dressing. The ECJ could get very busy if the government does try to seriously prune these rights.

There is a widespread perception that employment rights have swung too far in favour of employees and prevent employers from running their businesses as they would like.  I think more of this is made than is strictly correct, but it is true that employers face an ever increasing amount of burdensome employee rights.   I’ve written before how I think the government’s proposal to reduce the number of unfair dismissal claims by increasing the qualifying period of continuous employment experience from 12 to 24 months will backfire.  At present there is no qualifying period of employment needed to bring a discrimination claim.  Therefore if the length of time for unfair dismissal is increased, it will merely make employees look harder to find a discrimination element into their grievance so that they can present a claim to the Employment Tribunal.

The government’s hands are said to tied by European regulation from tinkering with Equality legislation.  Therefore, perhaps the way forward, even if it might seem counter-intuitive, is to uncap unfair dismissal awards and reduce the qualifying period, so that there is no need for employees to try and bring spurious discrimination claims.  That would leave discrimination cases for those cases that genuinely revolve around discrimination. A more robust approach on costs by ETs as well as issue fees for presenting an ET1 should reduce the number of unmeritorious claims.

Will it happen?  No, that would mean taking what Sir Humphrey Appleby of “Yes Minister” fame would have called a “courageous” political decision, and that’s not going to happen.