UK Employment Alert No. 127 - Increase in Employment Protection Awards 2007
December 1, 2006
The compensation limits on Tribunal awards will increase from 1 February 2007. The key changes are set out below.
| Statutory redundancy pay |
The current maximum amount permitted for calculation of a week’s pay will rise from £290 to £310.
| Basic Award |
The current maximum amount for a week’s pay will rise from £290 to £310.
| Maximum Compensatory Award |
The maximum Compensatory Award a Tribunal can award in most cases of unfair dismissal will rise from £58,400 to £60,600.
| Minimum Basic Award for defined dismissals |
The minimum Basic Award a Tribunal can award for certain defined dismissals (relating to certain employee representative, health and safety and working time cases) will rise from £4,000 to £4,200.
| What does this mean for employers? |
The changes will take effect on 1 February 2007 and will be applicable to redundancies and dismissals taking effect on or after that date.
It is important for employers to note that if an employee:
- is given notice prior to 1 February 2007 but the notice period will expire on or after 1 February 2007 then the new limits set out above will apply to that dismissal;
- is paid in lieu of notice, in most cases the effective date of termination will be the actual date of termination plus the amount of statutory notice applicable to the employee (ie 1 week per year of employment up to a maximum of 12 weeks). If the statutory notice would take the effective date of dismissal to or beyond 1 February 2007, then the new limits will apply.
Employers’ exposure in the event of an unfair dismissal claim will rise and should be factored into decision making about litigation or settlement strategy.
