Unfair dismissal compensation payouts reach record levels

The maximum compensation award for unfair dismissals has seen a 473% increase over the past decade, according to employment law and HR advisory services, Consult GEE.

The maximum compensation award is set to rise again in February from £60,600 to £63,000, up from just £11,000 in 1998.

Consult GEE, part of business advice firm Wolters Kluwer, said a steady increase has helped ensure that unfair dismissal claims have stayed at a consistently high level.

In the past year there were 44,491 unfair dismissal claims taken on by Employment Tribunals.

Stuart Chamberlain, employment law expert at Consult GEE, said: “For a disgruntled ex-employee, the prospect of a potential windfall that is nearly three times the average annual wage is all too alluring. It is not really surprising that the number of claims against employees has stayed so stubbornly high.”

However, Chamberlain admitted that the average successful unfair dismissal pay out was only £7,974.

“When you take into account the amount of time the employee has to spend on a case, the amount going on lawyers’ fees and after-the-event insurance premiums it’s a pretty poor return.”

“But don’t mistake that for thinking that employers get off lightly. For them the process is incredibly expensive and time consuming. As well as the obvious legal costs, tribunal claims create a huge distraction for a business. They burn through huge amounts of valuable management time,” Chamberlain added.

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