Yesterday (10 December) the Government was narrowly defeated in the Lords over its last-minute amendment to the Employment Rights Bill to remove the cap on compensation for unfair dismissal. That means that the Bill must return to the Commons once more, making it doubtful whether it will complete the Parliamentary process by the Christmas recess.
The amendment was part of a package which the Government believed it had agreed with employers’ representatives and trade unions last month. This involved dropping its plans for making protection against unfair dismissal a day 1 right and instead reducing the qualifying period from two years to six months (see our earlier post here).
However, the Lords were unhappy about the late introduction of such an important change: compensation for unfair dismissal has always been subject to some kind of cap. Instead, an amendment has been passed which would require the Government to conduct a “review” of the current limit on the compensatory award within three months of Royal Assent. This would include consultation with all interested parties, including employers’ organisations and trade unions. From the Government’s perspective, the big problem with that amendment is that if it concluded that the cap should be abolished after such a review, it would have no statutory power to make that change.
The issue of the cap is now the only remaining point of disagreement between the House of Commons and the House or Lords over the measures in the Employment Rights Bill, since all other outstanding Government amendments were agreed to yesterday.
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