Legislation update: Increase in compensation limits and tribunal awards

New compensation limits will come into force on 6th April which will increase statutory payments and tribunal awards in employment law cases.

The new maximum compensatory award for unfair dismissals will rise from its current rate of £80,541 to £83,682. The limit on a week’s pay, which is used to calculate statutory redundancy payments and the basic award in unfair dismissal claims, increases from £489 to £508.

Other changes include the rate of guarantee pay which will rise from £27 to £28 per day. There will also be an increase in the minimum basic award in cases where the reason for unfair dismissal relates to health and safety, employee representative, trade union, or occupational pension trustee reasons. This will rise from £5,970 to £6,203.

For the new rates to apply, the ‘appropriate date’ for the cause of action must fall on or after 6th April 2018. Old limits apply if the ‘appropriate date’ (e.g. the date of termination in an unfair dismissal claim) is before 6th April.

Here is a summary of the new rates for compensation limits and awards:

Maximum guarantee payments:
From 6 April 2017: £27 a day (max £135, five days in any three month period)
From 6 April 2018: £28 a day (max £140, five days in any three month period)

Maximum week’s pay:
From 6 April 2017: £489
From 6 April 2018: £508

Maximum basic award for unfair dismissal and statutory redundancy payment:
From 6 April 2017: £14,670 (30 weeks’ pay subject to the limit on a week’s pay)
From 6 April 2018: £15,240 (30 weeks’ pay subject to the limit on a week’s pay)

Minimum basic award for dismissal (trade union, health and safety, occupational pension scheme trustee, employee representative)
From 6 April 2017: £5,970
From 6 April 2018: £6,203

Maximum compensatory award for unfair dismissal (unlimited in some instances):
From 6 April 2017: £80,541
From 6 April 2018: £83,682

Additional award for failure to comply with reinstatement or re-engagement order:
From 6 April 2017: £12,714 – £25,428 (26-52 weeks’ pay maximum)
From 6 April 2018: £13,208 – £26,416 (26-52 weeks’ pay maximum)