« Majority of the 50 most "cost-efficient" MPs are Conservatives | Main | Conservative MPs urge Greece to leave the €uro but Treasury minister Mark Hoban declines to agree »

Christopher Chope makes the case for a maximum limit for unfair dismissal compensation

By Matthew Barrett
Follow Matthew on Twitter

Christopher_chope_mpAs Jonathan Isaby reported last week, Friday saw the Second Reading of Christopher Chope's Private Member's Bill, the Employment Opportunities Bill, which would allow "freely consenting adults" to opt out of the minimum wage.

Mr Chope takes an interest in employment legislation, and has sought to change the minimum wage before

Friday also saw the Second Reading of Mr Chope's Tribunals (Maximum Compensation Awards) Bill.

The Bill "would set a limit on compensation for awards for unfair or wrongful dismissal or discrimination arising out of employment and provides that that maximum limit should be £50,000". Mr Chope told the Commons:

"People are making or threatening to make claims when they are faced with dismissal, saying that they will not go for the ordinary unfair dismissal but will base their claim on the fact that their dismissal has been on the grounds of racial discrimination or discrimination based on sex, gender or something similar. We are getting a two-tier system in which people threaten to sue in a tribunal for the much larger, open-ended awards that are available and my Bill would place a cap of £50,000 on all that."

The difficulty of conducting proper research on the issue of unfair dismissal was highlighted by a question from a Labour member:

"Mr David Hamilton (Midlothian) (Lab): In the interests of clarity, can the hon. Gentleman tell us how many such claims have been unsuccessful? That would give weight to the argument that people are claiming just for a chance of getting some money.

Mr Chope: I have the figures somewhere, but I do not have them to hand this instant because I have a lot of papers. I hope the hon. Gentleman will forgive me for not answering his question, but the figures that I saw show that many claims are unsuccessful or not pursued, quite often because they are the subject of a settlement. Quite often the settlement is between unequal parties. The claimant has nothing to lose by taking the case to a tribunal but the employer is faced with substantial legal costs, plus disruption to his business, in defending his position. Those claims can end up being settled out of court, as it is called. They would probably be regarded by the hon. Gentleman as unsuccessful claims, but they might have been taken to the tribunal had it not been for the imbalance of power between the applicant and the employer.

Mr David Nuttall (Bury North) (Con): May I help my hon. Friend on that point? I suspect that no accurate figures are available because many of these claims are resolved before the application is put to the industrial tribunal. Although figures will be available for those withdrawn or settled after the industrial tribunal proceedings began, I suspect there will be many thousands of other cases that the public do not know about."

Labour members present naturally opposed the BIll, but, as Mr Chope said, "the issue is causing the coalition Government concern. That is why on 11 May the Department for Business, Innovation and Skills announced that the Government would look in detail at the case for reforming compensation for discrimination".

Damian Green, the Minister for Immigration, was present and responded in a receptive manner:

"My hon. Friend is right to point out the concerns that businesses have raised about the high levels of compensation sometimes awarded by employment tribunals in cases of unfair or wrongful dismissal or discrimination. The debate has been particularly timely, on which I congratulate him, because as I said, one aspect of the Bill is currently under active consideration by the Government as part of our general review of employment law.

I should make it clear to the House that there already exists a limit on compensation for unfair dismissal. It stands at £68,400. The average award is considerably below that level, as the hon. Member for Kingston upon Hull North (Diana Johnson) said. The median award for unfair dismissal is £4,903, and the mean is £9,120.

On 27 January we launched a consultation on proposals to improve the way in which workplace disputes are resolved, and we published an employers charter to give employers more confidence to take on workers and support growth. In that consultation, we sought views on changing the formula for calculating employment tribunal awards, including that current limit on compensation for unfair dismissal. Among other things, the consultation sought views on increasing the current qualifying period for unfair dismissal rights from one to two years. The consultation closed after 12 weeks on 20 April 2011, and we are currently considering our response. We will publish that, setting out what we intend—"

The debate was then adjourned, to be resumed on Friday 9th September.

The full debate can be read here.


You must be logged in using Intense Debate, Wordpress, Twitter or Facebook to comment.