Increases announced to UK Employment Compensation Limits & Statutory Rates of Pay

March 01, 2019

The annual increases to the compensation limits applying to certain UK employment claims have now been published and will take effect in April 2019. An Order laid before Parliament will increase the maximum compensation which can be awarded by the Employment Tribunal in “ordinary” unfair dismissal claims, as well as the maximum weekly wage figure for calculating an employee’s entitlement to a statutory redundancy payment for the new tax year. The statutory rates of maternity, paternity, adoption, shared parental and sick pay will also rise from April 2019.

Compensation limits

The Employment Rights (Increase of Limits) Order 2019 will come into force from 6 April 2019 and will revise various employment compensation limits based on the increase of 3.3% in the September 2018 retail price index since the previous year.

In particular, the calculation of statutory redundancy payments and the maximum award available by way of unfair dismissal compensation will change in relation to dismissals where the effective date of the termination of the individual’s employment falls on or after 6 April 2019 as follows:

  • 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 £525 – the current limit is £508.
  • The maximum compensatory award for unfair dismissal will now be £86,444 – the current limit is £83,682. Since July 2013, there has also been a separate cap of one year’s gross pay on “ordinary” unfair dismissal compensatory awards – the maximum award will therefore now be the lower of one year's gross pay and £86,444. 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.
  • The minimum basic award for unfair dismissal in health and safety, employee representative, trade union and occupational pension trustee cases will increase from £6,203 to £6,408.

Various other statutory compensation limits are also increased from 6 April 2019.

Statutory pay rates

The Government has also published increases to the statutory rates for maternity pay, paternity pay, shared parental pay, adoption pay and sick pay in the draft Social Security Benefits Up-rating Order 2019:

  • From 6 April 2019, the statutory sick pay rate will increase from £92.05 per week to £94.25.
  • From 7 April 2019, the statutory rate of maternity pay, paternity pay, adoption pay and shared parental pay will increase from £145.18 per week to £148.68.

Further details are available in the Employment Rights (Increase of Limits) Order 2019 and the Social Security Benefits Up-rating Order 2019.

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