End compensation ceiling, says report

THE LIMIT on unfair dismissal compensation should be scrapped, according to a report by the Employment Lawyers Association (ELA).

The Government is carrying out its annual review of the limit of unfair dismissal compensatory awards (currently £11,300) and the limit of a week's pay for calculating redundancy payments (currently £210).

The ELA claims that limits have slipped way behind earnings since they were introduced in 1971.

ELA treasurer James Davies, a partner at London-based firm Lewis Silkin and one of the authors of the report, said: “The compensatory award would now be in excess of £48,000 if it had increased in line with earnings.

“The limits are too low to encourage good employment practices. Employers cannot be bothered to solve employees' problems when they know that they can dismiss them without significant penalties.” He said that, as a result, there was a distinct lack of job security and added burdens on industrial tribunals.

Davies said that, as a result of the limits, employment lawyers were forced to look for anomalies within race and sex discrimination law where there were no limits.

He said: “It is wrong that a lawyer should have to look for race and sex angles in a case where there might not be any, just so they can get a better deal for their client.”

He claimed that the Government was against increasing compensation payments because of its commitment to business growth. “Cheaper employment rights mean cheaper labour and greater profits. The idea is that bad employers do better,” Davies said.

The report, which has been presented to the Government, was prepared by Davies and employment law barrister Paul Goulding.