The maximum award falls from £66,200 to £65,300 to reflect a
fall of 1.4% in the retail price index (RPI) from September 2008 to
September 2009. The compensation caps are linked to the RPI.
"Under section 34 of the Employment Relations Act 1999, if the
retail prices index for September of a year is higher or lower than
the index for the previous September, the Secretary of State is
required to change the limits, by Order, by the amounts of the
increase or decrease," said the explanatory note to the Statutory
Instrument changing the caps. "The revised amounts made by this
Order reflect the decrease of 1.4% in the index from September 2008
to September 2009."
Employment law expert Ben Doherty of
Pinsent Masons, the law firm behind OUT-LAW.COM, said that the fall
will be welcomed by business.
"Some companies take the view that employment law is designed
more for employees than employers," he said. "While I don't
necessarily agree with that, this reduction may be seen as good
news by some of those employers."
Doherty said that the fall, though, is not something that will
reduce compensation orders by a similar proportion.
"Employment Tribunals' approach is to look at the losses to an
employee caused by an employer's behaviour," he said. So if someone
earning £30,000 a year is unfairly dismissed and is deemed to have
lost a year's salary that will not be reduced to reflect the
reduction in the cap, he said.
"It will only affect those whose compensation awards are at or
higher than the cap," he said.
The changes will take effect from 1st February 2010.
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