Partner Article

Cap will increase discrimination claims

Alan Jones, partner at Averta, comments of proposed changes in rules for unfair dismissal from Business Secretary, Vince Cable:

The Business Secretary Vince Cable appears to have signalled the end of removing protection from unfair dismissal, with his comments at the Liberal Democrat Conference that “headbangers…who seem to find sacking people an aphrodisiac” have been seen off, saying that a “hire and fire culture” is totally irrelevant in a country with flexible labour markets which he says have created over a million private sector jobs in the last two years.

However Mr Cable has piloted a variety of reforms to employment laws, some of which are still under consideration and consultation. Certainly there will be fees for bringing a tribunal claim, and it may be that a cap is imposed on compensation for unfair dismissal at around a year’s pay. However it is not clear whether it is a year’s pay for the average employee, or a year’s pay for the actual claimant. That particular reform seems a step too far when one considers that the average award for a claimant is around £5,000, so the only people who are likely to be affected are high earning managers and directors. So instead of bringing tribunal claims they may have to bring complicated and expensive High Court actions for recovery of damages. How will that reduce the proliferation of claims one wonders?

The more important point to note however is that there are no proposals to reduce compensation in discrimination or diversity based claims. So inevitably, a claimant who faces the prospect of severely limited compensation from the Employment Tribunal for unfair dismissal would tend to bring a claim based on age, race, sex or disability. That is not to say that claimants will “invent” claims but, with an aging workforce, and people finding it hard to secure a new position, it is inevitable that diversity based claims will increase.

Still the Beecroft proposal, commissioned earlier this year, which would have allowed companies to sack workers for a nominal pay-out (the so called “no fault dismissal” plan) has been quietly abandoned, so employees continue to have protection from arbitrary dismissal, at least for the time being.

Averta Employment Lawyers is a leading firm for executive severance work

This was posted in Bdaily's Members' News section by Alan Jones .