<\/p>\n
The government confirmed that it would be removing the current cap on unfair dismissal awards as part of the changes being brought in by the 2025 Employment Rights Act<\/a>.<\/p>\n It has also confirmed that the minimum service requirement for unfair dismissal will be lowered from two years to six months, as part of a tranche of changes coming into force on 1 January 2027.<\/p>\n Anne Sammon<\/a>, an employment law expert with Pinsent Masons, said confirmation of the removal of the compensation cap would give employers a greater degree of certainty for planning how to handle potential awards. But she also warned: “Employers will need to think holistically about their remuneration structures and the consequences of these for unfair dismissal awards, and advice may be needed for mitigation strategies\u201d.<\/p>\n \u201cIn terms of wider strategies, these might include making enhanced redundancy payments – or other payments that are dependent on redundancy status – contingent on the employee entering into a settlement agreement to avoid employees being able to receive such an enhanced payment and still bring an unfair dismissal claim.”\u00a0 \u00a0<\/p>\n Under the change, the existing cap on compensatory awards for unfair dismissal \u2013 which currently stands at the lower of either \u00a3118,223- or 52 weeks\u2019 gross pay \u2013 will be removed entirely.<\/p>\n The government confirmed in an update<\/a> (2-page PDF) that it would not be carrying out further public consultation on the changes to unfair dismissal, having previously said there would be an impact assessment<\/a> before the new regulations are enacted.<\/p>\n \u201cThese measures are the conclusion of a series of constructive, government-convened conversations between trade unions and business representatives, and follow rigorous parliamentary debate,\u201d it said.<\/p>\n Removing the cap had been one of the issues that had slowed the ERA\u2019s progress into law, after the House of Lords originally pushed back on the proposal.<\/p>\n The lowering of the minimum service period had been a sticking point in the Act\u2019s progress through Westminster last year, with the government being forced to drop its initial plans for day one protection from unfair dismissal.<\/p>\n","protected":false},"excerpt":{"rendered":"
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