The raised ceiling on unfair dismissal payouts is encouraging aggrieved
employees to push for a tribunal hearing in the hope of securing a windfall,
according to a leading employment law firm.
"Anecdotal evidence suggests that the rise in the ceiling to £50,000
has already affected employee expectations, making it harder for employers to
settle claims before any hearing takes place, even though for lower-paid
employees the increase is unlikely to have any impact," said partner at
DLA Mary Clarke.
She gave the example of a £15,500-a-year delivery worker who claimed unfair
dismissal following his sacking for suspected theft. Although he found another
job on the same pay within six weeks, he remained confident of winning the
maximum £50,000. He received only £2,290.
The "windfall" mentality is one of several reasons for the large
increase in tribunal cases highlighted by recent figures from Acas. Other
factors include new employment rights, the increased confidence of trade unions
in backing claims and the growth of no-win, no-fee deals.
This has led the Government to consider new ways of curbing frivolous
claims, such as pre-tribunal hearings and forcing vexatious claimants to pay
Clarke also warned that employers should beware of a new type of claim from
higher-paid staff with valuable pension rights who can demonstrate to a
tribunal that they may not work again.
"The £12,000 cap made the tribunal largely irrelevant for this sort of
applicant but now it is certainly worth their while to bring a claim."
Employers would be wise not to make any ex-gratia payments to such staff
without a binding agreement to waive their tribunal rights, she adds. Even
generous payments will not stop tribunals awarding full compensation and
"top-slicing" the ex-gratia sum.
Clarke cites the case of a £60,000-a-year senior executive dismissed at the
age of 56 with an £11,000 ex-gratia payment. The tribunal calculated her loss
until retirement as £234,000 and awarded her the full £50,000.