Small Surprise, Big Impact

The Enterprise and Regulatory Reform Bill has been published and contains a little surprise.  We all knew it would address pre claim conciliation and the like but tucked away in Section 12 is a little section that packs a surprising punch.

Section 12 provides that the Secretary of State may vary (either up or down) the limit of the compensation payment that may be awarded by an Employment Tribunal in unfair dismissal claims. The current limit for such an award is £72,300 but Section 12 of the Bill would permit the Secretary of State to change that limit, either by introducing a specified amount (which can’t be less than the UK’s median earnings and can’t be more than three times the median earnings) or by limiting it to a sum that is equal to ‘a multiple of  individual’s week’s pay’ where that multiple can’t be more than 52. That seems to be legislation speak for ‘up to one years salary’.

For those who don’t have the figures at their fingertips, the median gross annual earnings for full time employees in the UK at the moment according to the Office for National Statistics, is £501 a week (£26,052 a year). Three times that is £78,156. That means the Secretary of State can could change the limit of the compensation that may be awarded by an Employment Tribunal to be between £26,052 and £78,156, or a year’s salary.

Who saw that one coming?

For further advice please contact Linky Trott, Partner, by emailing linky.trott@edwincoe.com.

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