The maximum compensatory award that employment tribunals can impose in unfair dismissal cases is currently one year's salary or £76,574 (whichever is the lower). The cap of one year's salary was introduced in July of last year. In R (on the application of Compromise Agreements Ltd) v Secretary of State for Business, Innovation and Skills Compromise Agreements Ltd argued that the cap of one year's salary amounted to age discrimination.
They argued that the cap indirectly discriminates against older people as they are likely to take longer to find another job and more likely to be unemployed for more than a year after being dismissed. They argued that if the cap was not in place older people would often be entitled to a larger award to reflect the actual amount time they spent out of work.
The High Court heard the application for permission to launch a judicial review last week and dismissed it. There is a suggestion though that Compromise Agreements Ltd may attempt to appeal the decision. As I mentioned in my previous blog I do not believe that this claim is likely to succeed. Even prior to the cap of one year's pay being introduced Employment Tribunal awards in excess of £30,000 were made in a relatively small proportion of cases. Given that the average salary in the UK is only £26,000 the effect of the cap is not likely to make a significant difference in practice.