Cap on Unfair Dismissal Compensatory Award

From Summer 2013, the unfair dismissal compensatory award will be capped at the lower of one year’s gross pay (excluding pension contributions, benefits in kind and discretionary bonuses) and the existing limit of £74,200.

Practical Implications

This cap may well focus the minds and help manage expectations during settlement discussions.  This will be particularly the case where the value of the year’ salary is not far off the likely cost of defending a claim or where the year’s salary is in excess of the cap.  On the other hand, it may mean employees try even harder to establish a detriment by reason of a protected characteristic under the Equality Act – where damages are unlimited.

For further information, help or advice please contact our Employment Team on 0191 211 7777 or email [email protected].