Increase in UK Employment Compensation Limits

The maximum compensation that the Employment Tribunal can award for “ordinary” unfair dismissal claims will increase from 6 April 2016, as will the weekly wage figure for calculating an employee's entitlement to a statutory redundancy payment.

The Employment Rights (Increase of Limits) Order 2016 will change the calculation of statutory redundancy payments and unfair dismissal compensation in relation to dismissals where the effective date of the termination of the individual’s employment falls on or after 6 April 2016:

• A week’s pay (for the purposes of calculating both the basic award in unfair dismissal cases and statutory redundancy payments) will be capped at £479 – the current limit is £475.
• The maximum compensatory award for unfair dismissal will be capped at £78,962 – the current limit is £78,335. Since July 2013 there has also been a separate cap of one year’s pay on “ordinary” unfair dismissal compensatory awards. The cap on unfair dismissal compensation does not apply where the reason for dismissal was that the employee was carrying out health and safety activities, had made a “protected disclosure” or was selected for redundancy for one of those reasons - further compensation can also be recovered where an additional award is made because the employer has failed to comply with a reinstatement or re-engagement order.

Various other statutory compensation limits are also increased from 6 April 2016. Further details are available in the Employment Rights (Increase of Limits) Order 2016.