Canary Wharf Settlement Agreements: Why the End of the Unfair Dismissal Cap Changes the Numbers

For the first time in decades, there will be no ceiling on what a UK employment tribunal can award for unfair dismissal. From 1 January 2027, the statutory cap — currently £123,543, or 52 weeks' gross pay, whichever is lower — is being removed entirely under the Employment Rights Act 2025.

For most UK workplaces, that change will barely register. The median compensatory award for unfair dismissal was £6,746 in 2023/24 across 646 reported cases — nowhere near today's limit. But if you work in, or employ people in, Canary Wharf, that national average tells you almost nothing about what's coming.

The numbers at a glance

• Cap to April 2026: £118,223, or 52 weeks' gross pay, whichever is lower.
• Cap from April 2026: £123,543, or 52 weeks' gross pay, whichever is lower.
• From 1 January 2027: uncapped. Both the cash cap and the 52-week alternative are abolished.
• Median compensatory award, 2023/24: £6,746 across 646 reported cases.

Cap figures are drawn from published commentary on the Employment Rights (Increase of Limits) Order and the Employment Rights Act 2025. The January 2027 date is the government's stated intention rather than a confirmed commencement date, so treat it as the planning assumption, not a fixed deadline.

Why Canary Wharf is different

Canary Wharf isn't a typical workplace. It's banks, asset managers and fintechs paying six-figure salaries, often with bonuses and share awards on top. Once the cap disappears, a dismissal that goes wrong for one of those employers is no longer limited to £123,543 — the tribunal can award whatever it decides the employee actually lost, bonus and all.

"The Wharf isn't a typical workplace. It's banks, asset managers and fintechs paying six-figure salaries with bonuses and share awards on top. Take the cap away and a dismissal that goes wrong for one of those employers isn't capped at £123,543 any more — it's whatever a tribunal decides that person actually lost, bonus and all. That's the kind of number that makes a board sit up."

— Taj Ahmed, Principal Solicitor, Deen & Co Solicitors

For a senior employee on £250,000 plus bonus, 52 weeks' pay was already the effective ceiling, and the cash cap bit hard. Remove both and the exposure is simply whatever the loss is: base salary, deferred awards, pension, and the bonus cycles that would have vested.

Why this points towards more settlement agreements, not fewer

An uncapped tribunal is an unquantifiable risk, and most employers don't like unquantifiable risk. A settlement agreement lets an employer agree a fixed number today, in exchange for certainty, rather than take a dismissal to a tribunal hearing where — after January 2027 — there is no ceiling on what it could cost.

"A settlement agreement lets an employer put a number on the table and walk away with certainty. After January, the alternative is a blank cheque. For a Canary Wharf employer with a senior person on £250,000 plus bonus, that's not a risk many boards will want to sit with — which means more settlement agreements, negotiated earlier and taken more seriously, not fewer."

— Taj Ahmed, Principal Solicitor, Deen & Co Solicitors

The practical consequence is timing. Employers who would previously have let a difficult exit run are more likely to open a settlement conversation early, and to price it against uncapped exposure rather than a fixed statutory number.

What this means if you've been offered a settlement agreement in Canary Wharf

• The number on the table should reflect this new exposure, not last year's playbook — particularly if bonus, share awards or garden leave are part of your package.
• Bonus, deferred share awards, garden leave and restrictive covenants are exactly the areas that make a Canary Wharf settlement agreement different from a standard one. See our guide to settlement agreements for banking and finance professionals.
• Check whether your restrictive covenants are actually enforceable before you trade them away.
• Independent legal advice is a legal requirement for any settlement agreement to be valid — and in almost every case, it's your employer who pays for it, not you.

Not sure whether an offer is fair? Start with our settlement agreement calculator, or read our full guide on how much you should get in a settlement agreement.

What this means if you're the employer

• Assume settlement conversations about senior, bonus-earning staff get more expensive to open, not less.
• Model exposure on actual loss, including bonus and deferred awards, not on the old cap.
• Get the process right first. Uncapped compensation makes a flawed dismissal process a materially bigger financial problem. We advise businesses through our HR and employment law service.

Frequently asked questions

When exactly does the cap disappear?

The government's stated intention is 1 January 2027. A commencement date has not yet been formally confirmed, so plan for it rather than bank on it.

Does uncapped mean unlimited awards for everyone?

No. Compensation still has to reflect actual financial loss, and tribunals still apply the usual reductions for contributory conduct, failure to mitigate and procedural findings. What changes is that high earners are no longer artificially capped below their real loss.

Should I wait until 2027 before signing?

Not necessarily, but you should not accept a 2025-era number for a 2027-era risk. Get the offer reviewed before you sign anything.

Who pays for my advice?

In almost every case your employer contributes to your legal fees as part of the agreement, and we invoice them directly.

The bottom line

"Whether you're the business trying to manage this risk or the employee sitting across the table from it, the message is the same: get proper advice on the settlement agreement, because the numbers behind it just changed."

— Taj Ahmed, Principal Solicitor, Deen & Co Solicitors

Deen & Co Solicitors provides free, same-day settlement agreement advice to employees across Canary Wharf and East London, with fees paid by the employer in almost every case. Read the full guide: the unfair dismissal compensation cap removal explained. Employers should read preparing your business for uncapped unfair dismissal awards.

Call 0208 551 0476 or request a callback.