Following a modest increase in tribunal compensation limits on 1 February, the maximum award is now around £75,000 (although in cases of unlawful discrimination, compensation is unlimited). The employer must have a proper reason for dismissal - eg, redundancy or poor performance - and follow a fair procedure. In most cases, both sides want to avoid the risk, time and expense of going to tribunal. The employee usually signs a compromise agreement, waiving legal claims in return for a payment and possibly a decent reference. For the settlement to be valid, lawyers must be involved. In practice, the amount employees get may depend less on the merits of their case than on matters such as their need for ready cash, negotiating skills and fears about damage to reputation. Is there a better way? In some countries, employers are free to dismiss but have to pay the employee a set indemnity in addition to notice pay (except in cases of serious misconduct). Introducing a similar regime here might deter employers from terminating employment willy-nilly, while the high costs, uncertainties and delays of litigation could be greatly reduced. Discuss.
- Michael Burd and James Davies, Lewis Silkin LLP solicitors - e-mail: email@example.com