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For more than 10 years we have provided companies of all sizes and in a variety of sectors with uncomplicated, innovative and affordable human resources advice and on-site support ensuring that your people are an asset to your company and not a liability.

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With the National Minimum Wage (NMW) now almost fifteen years old, and with another increase pending on 1st April 2017 HMRC have issued a list of the most elaborate excuses they've been given by employers for not paying the appropriate rates:

Ending Caps on Unfair Dismissal Compensation

Alan Kitto

As part of its decision to abandon day one unfair dismissal rights in favour of reducing the qualifying period from two years to six months continuous employment, the government has committed to scrapping the statutory cap on compensation for ordinary unfair dismissal cases.

This cap previously limited compensation to the lower of 52 weeks’ pay or a fixed maximum statutory limit. With the new reforms, compensation will become uncapped, allowing tribunals to award sums that reflect the actual financial losses suffered by an employee.

Why This Matters, Especially for Certain Groups

Higher Earners 

Under the old system, the cap often meant that senior professionals or high earners could recover only a fraction of their true financial loss. With uncapped awards, compensation can now reflect lost salary, bonuses, pension contributions, and benefits. This shift gives higher earners a meaningful avenue to pursue claims where previously the capped compensation may not have justified legal action.

Older Employees and Those With Health Conditions 

This change is particularly significant for older employees or those managing long‑term health conditions. These individuals may find it more challenging to secure new employment quickly, meaning their financial losses can extend well beyond a single year.

Uncapped compensation ensures that tribunals can consider:

  • Longer job‑search periods,

  • Reduced future earning potential,

  • Loss of pension accrual,

  • Long‑term financial impact of displacement from the workforce.

Increased Risk for Employers 

From the employer's perspective, this reform significantly increases potential liability. Dismissal decisions in the above categories now carry substantially higher financial risk, especially where future earnings losses could span multiple years. Employers may need to re-evaluate dismissal processes, settlement strategies, and the overall handling of employee relations matters.

Summary 

The reduction in the qualifying period and the removal of the cap on unfair dismissal compensation represents one of the most impactful changes to UK employment law in decades. It strengthens protection for employees, particularly higher earners, older workers, and those with health issues, by allowing tribunals to award compensation that reflects the true extent of their losses. For employers, it underscores the need for careful, fair, and well-documented dismissal practices moving forward.

The above changes all reply on the Employment Rights Bill passing through parliament, this far the House of Lords has rejected the draft legislation on several occasions but many of their concerns with previous drafts have now been addressed.

The press are widely reporting that these changes are likely to take effect from January 2027 although there is scope for them to be implemented during 2026.