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 2018, as will the weekly wage figure for calculating an employee′s entitlement to a statutory redundancy payment. The Employment Rights (Increase of Limits) Order 2018 will change the calculation of statutory redundancy payments and the maximum awards available by way of 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 2018. 

• 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 £508 from 6 April 2018 – the current limit is £489. 

• The maximum compensatory award for unfair dismissal is the lower of 52 weeks’ pay and a specific financial figure which is reviewed each year and will from 6 April 2018 be capped at £83,682 – the current limit is £80,541. The cap on unfair dismissal compensation does not apply where the reason for dismissal (including selection for redundancy) was that the employee was carrying out health and safety activities or had made a “protected disclosure” – 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. 

• The minimum basic award for unfair dismissal in health and safety, employee representative, trade union and occupational pension trustee cases will increase from £5,970 to £6,203. 

Various other statutory compensation limits are also increased from 6 April 2018. Further details are available in the Employment Rights (Increase of Limits) Order 2018.