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No Fault Dismissals

Posted on September 14, 2012

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No No to No-Fault Dismissals:
As has been widely reported in the press today, the government will not be going ahead with ‘no-fault dismissals’ for micro businesses, which is something that many small businesses will no doubt be unhappy about.


The government has announced it wants to encourage greater use of settlement (compromise) agreements and will reduce the cap for compensatory awards in unfair dismissal claims (currently £72,300), and imposing a second cap of 12 month’s pay. The majority of successful claimants in unfair dismissal claims do not get anything like £72,300 awards for loss of earnings etc, though many Claimants do seek in excess of 12 months loss of earnings.


The government are proposing a template letter and guidance on reaching a settlement agreement, and which if used will not be admissible in evidence. This is unlikely to be a lot different though to the current principles for use of ‘without prejudice’ correspondence and compromise agreements.


Other reforms are largely technical in nature. Despite press coverage therefore, these reforms are unlikely to make a big change to many employers. It is worth remembering though that employees taken on after the 6th April 2012 will now have to wait 2 years before claiming unfair dismissal, though other claims such as unlawful discrimination can still be brought from day one.


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