Damages-based agreements in employment claims: the 35% cap including VAT (DBA Regs reg 7)

The Damages-Based Agreements Regulations 2013 set caps on the payment a representative may take from a client's recovery. For employment matters, regulation 7 provides that a damages-based agreement must not provide for a payment above an amount which, including VAT, is equal to 35% of the sums ultimately recovered by the client. Aisha recovered £60,000, so the maximum payment is 35% of £60,000, which is £21,000, and that figure includes any VAT. The 25% cap in regulation 4(2) applies to personal injury claims, and the 50% cap in regulation 4(3) to other civil claims at first instance; neither applies to an employment matter.

Why A is wrong: 25% is the cap for personal injury claims under reg 4(2), not employment matters.

Why C is wrong: The 35% cap is inclusive of VAT, so VAT cannot be added on top.

Why D is wrong: The 50% cap in reg 4(3) applies to other civil claims, not employment matters.

Why E is wrong: DBAs are expressly permitted in employment matters, subject to the 35% cap in reg 7.