Employment Rights Bill

Paul Waugh Excerpts

Consideration of Lords message
Monday 15th December 2025 Commons Chamber

[Kate Dearden]

An economic assessment will be published, as is standard practice.

[Paul Waugh (Rochdale) (Lab/Co-op)]

I am sure that my hon. Friend shares my frustration at the sheer misinformation that has been spread about the removal of the cap on compensation. As she rightly says, the median award at the moment is less than £7,000. More importantly than that, only 2% of all employment tribunals ever result in a compensation award for unfair dismissal. Does she agree that the Government have indeed taken into account the concerns of Cross-Bench peers by committing to an assessment, and more importantly does she agree that those employers and the unions together can see what the Opposition do not, which is that this is will be fair to workers and fair to businesses that are fair to their workers?

[Kate Dearden]

I wholeheartedly agree with my hon. Friend’s comments. We believe that the current compensatory award cap also creates a systemic incentive for unfair dismissal claimants to construct more complex cases, which could take longer for a tribunal to handle. By removing the compensatory award cap for unfair dismissal claims, the incentive may be lessened, potentially making it easier for tribunals to reach a judgment more quickly and decreasing the burdens on the system.

--- Later in debate ---

[Bradley Thomas]

I was just about to get to the point that I wanted to make: removal of the cap will make matters significantly worse. To put it plainly, it will open the floodgates for senior executives to pursue multimillion-pound claims that will further congest the courts. For many companies, the dismissal process for senior executives is fundamentally different from that used for other employees, in many cases as a result of strategic complexities relating to board involvement. Unlike the structured procedures applied to the wider workforce, senior leaders are seldom afforded opportunities such as performance improvement plans before removal. The Bill creates a significant liability and establishes a direct financial incentive for senior executives to pursue employment claims.

[Paul Waugh]

Is the hon. Gentleman aware that, at the moment, compensation for racial, sexual and disability discrimination, and for whistleblowers, is uncapped? What is the difference between that and being unfairly dismissed?

[Bradley Thomas]

The hon. Gentleman misses the point that I am making. Currently, there is no financial incentive for very senior executives who cannot exercise any leverage over things such as pay and equity, and the Bill risks clogging up the system. The CEOs of large UK corporations earn a median salary of over £4 million, compared with the £118,000 cap on unfair dismissal claims, so high earners have little incentive to lodge claims. Remove the cap and that incentive becomes glaringly obvious.