Law change allows claims of pounds 36,000 over sackings

A NEW law is expected to lead to a flood of cases in which employees claim up to pounds 36,000 for unfair dismissal and breach of contract.

Industrial tribunals have been granted a right to hear complaints about contracts as well as allegations of unlawful sacking. The decision means that compensation available at tribunals has risen more than threefold. Until now aggrieved ex-employees only had recourse to relatively expensive litigation through the courts.

Under a regulation passed by the House of Lords, tribunals can award a maximum of pounds 36,000 - pounds 11,000 for unfair dismissal and pounds 25,000 damages for breach of contract. The previous maximum was pounds 11,000. The rule came into effect on 12 July and allows claimants to bring cases within three months of their dismissal.

Writing in the magazine Personnel Management, the Labour lawyer Olga Aiken points out that previous legislation extending the powers of tribunals led to a considerable increase in their caseload.

Before the Wages Act 1986, claims for non-payment of wages or wrongful deductions had to be brought in the ordinary courts. After the Act, cases went to tribunals and last year they amounted to more than a quarter of all referrals to the industrial relations officer at the conciliation service Acas.

The law allows a litigant full remuneration for the length of time it would have taken to end his or her contract legitimately. If a 'poor performing manager' is entitled to three months' notice under a contract and a warning and dismissal process would have taken six months, then the employee is entitled to nine months' remuneration.

However, the new rules also allow employers to mount counter-claims for property lost because of the employee's negligence, for instance. Counter-claims could exceed the original claim.