Lawyers are warning organisations that rises in the levels of compensation
payments that can be awarded for breaches of employment law could cost UK
businesses £20m for unfair dismissal cases alone.
The total amount that can be awarded to individuals at employment tribunals
has risen in several types of case, but the bill for unfair dismissal could
rise by more than £500,000 during 2004 and 2005.
Associa Employment Service has warned that the increases could hit the UK’s
smaller firms the hardest. Mark Thompson, legal team leader at the firm, said
the increases in the upper limit for statutory redundancy and unfair dismissal
could prove costly for employers.
"Small businesses face a challenging year dealing with employment law
changes. These increases will be another unwelcome cost for many employers.
"New anti-discrimination legislation introduced at the end of last year
could leave businesses facing an increase in claims in addition to the unfair
dismissal compensation bill," he said.
The changes, which took effect at the beginning of February, raised the
maximum compensation for unfair dismissal from £53,500 to £55,000.
Other awards affected by the increases include the figure used to calculate
a week’s pay and the amount of compensation given when an individual is
excluded or expelled from a union.