'Frankly bonkers' | Experts warn of 'seismic change' amid plans for unlimited unfair-dismissal compensation

Employment lawyers have voiced concern after reports that the Government is considering scrapping the cap on compensation for unfair dismissal claims. 

The current limit - one year’s pay or £118,223 (whichever is lower) - could be removed entirely, allowing successful claimants to seek unlimited financial awards. Combined with the proposed reduction of the qualifying period for unfair-dismissal rights from two years to six months, specialists say the change would dramatically raise employers’ exposure.

Here’s how leading employment-law practitioners are reacting, and what HR leaders may soon need to prepare for.

Warning over higher-value claims & rising complexity

Ben Smith, Associate at Littler, said that “entirely removing the cap on compensation would be a surprising move at this late stage.” He warned that “removing the caps entirely also making it more difficult for unfair dismissal claims to be resolved without litigation, if potential claimants have unrealistic expectations of compensation the tribunal might award.”