Employment Alert No. 83 - Statutory Cap For Unfair Dismissal Damages
May 12, 2004
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What Has Happened? |
You may have read in The Times newspaper on Monday 3 May 2004 that the Department of Trade & Industry is planning to remove the statutory cap on damages for unfair dismissal (currently £55,000). Such increased award is currently subject to the statutory cap of £55,000. However, the Department of Trade & Industry has confirmed that the article is incorrect, and there is no plan to remove or amend the statutory cap (although it will increase as usual on 1 February 2005).
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What Does This Mean for Employers? |
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Whilst this is good news, employers should bear in mind the new statutory dismissal procedures coming into force on 1 October 2004. If the employer fails to follow the required procedure, the dismissal will be deemed to be automatically unfair, resulting in a minimum basic award of four weeks’ pay (capped at the statutory maximum of £270 per week), and an increased compensatory award (subject to the cap).
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The procedures apply not only to dismissals in connection with disciplinary offences, but also on redundancy, expiry of the fixed-term contract, compulsory retirement below the age of 65 (or the company’s normal retirement age), and in long-term sickness dismissals.
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Employers should plan ahead to ensure that their current disciplinary and dismissal procedures comply with the statutory procedures to avoid running into problems after 1 October 2004.
Further details on these procedures and their effect can be requested from the Employment Department.
