From 1st February 2013 an Employment Tribunal will be able to award no more than £74,200 (currently £72,300) by way of a compensatory award in unfair dismissal cases. In discrimination and whistleblowing cases there is no cap on the maximum amount of the award.
The maximum amount of a week’s pay, used to calculate the statutory redundancy payment and also the Basic and Additional Awards will also increase from £430 to £450 per week.
These increases (and other relating to minimum awards when a person has been expelled from a union and guarantee payments) are made in accordance with the Employment Rights (Increase of Limits) Order 2012. However, the Government announced back in September that it will consult on reducing the maximum amount of the compensatory award, as part of its attempt to streamline employment procedures. This latest increase may, therefore, be the last of the increases we see at this level.
According to statistics produced by the ET only 2% of unfair dismissal cases which made it to a final hearing were awarded more than £50,000 and the average award was £9,133. Therefore this annual increase appears to be of significance to only a very few litigants (less than 49 according to the ET statistics).
The maximum limit is of more significance though in negotiations between the parties prior to litigation or the ET making an award. These statistics don’t tell us how many claims were settled by way of a compromise agreement or a COT3 at that level. I would suspect many more than 49 across the country though. Many more. The maximum award does have significance for this reason alone.
Last week the Telegraph ran a story suggesting that the Treasury is considering removing all sorts of tax-free incentives, such as cheap petrol, subsidized food in staff canteens and, horror of horrors, abolishing the £30,000 tax concession on redundancy payments. That would be a body blow to many people currently being made redundant and I would venture to guess that that may be one cut too far, especially as many Conservative voters are currently making use of it.
The figure has stood at £30,000 for as long as I can remember, at least 20 years and has fallen way behind inflation. If anything, it ought to be increased but that is never going to happen in the current environment. My guess is that if there is any truth in the Telegraph’s story (and it certainly sounds plausible) the limit will be salami–sliced back from £30,000 to £20,000 and thence downwards until it becomes meaningless. Alternatively it might be restricted to basic rate taxpayers only.
Hard Times indeed.