UK Employment Rate and Compensation Increases Now in Effect

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The compensation limits on Employment Tribunal awards and certain other amounts payable under UK employment legislation have increased with effect from 6 April 2020.

This Alert sets out the latest changes in full and highlights important consequences for employers.

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The following changes came into effect on 6 April 2020.

  Employment Tribunal Award / Statutory Rate
  
  Old Maximum
  
  New Maximum
  
  One week’s pay for calculating redundancy and the
  unfair dismissal basic award
  
  £525
  
  £538
  
  Maximum basic award
  for unfair dismissal and maximum statutory redundancy pay
  
  £15,750
  
  £16,140
  
  Maximum compensatory award for unfair dismissal
  
  £86,444
  
  £88,519
  
  Maximum total award
  for unfair dismissal, i.e., maximum unfair dismissal compensatory
  award plus maximum basic award
  
  £102,194
  
  £104,659
  
  Minimum basic award
  for certain unfair dismissals, including dismissals relating to health and
  safety and pension scheme trustee duties
  
  £6,408
  
  £6,562
  
  Statutory sick pay per week
  
  £94.25
  
  £95.85
  
  Family-friendly statutory pay (adoption, maternity,
  paternity and shared parental pay) per week
  
  £148.68
  
  £151.20
  

The changes relating to redundancy and unfair dismissal payments, as set out in the table above, will apply to dismissals where the effective date of termination (EDT) falls on or after 6 April 2020.

It is important for employers to note:

  • If an employee was given notice prior to 6 April 2020, but the notice period expires on or after 6 April 2020, the new limits will apply.
  • If an employee’s employment is terminated by means of a payment in lieu of notice, the EDT is the actual date the dismissal takes effect, plus the amount of statutory notice applicable to the employee, i.e., one week per year of employment, up to a maximum of 12 weeks. If the statutory notice would take the EDT to or beyond 6 April 2020, the new limits will apply.

Note that for other employment claims, such as discrimination and whistleblowing, an employer’s potential liability remains uncapped.

For completeness, note that the following changes to national minimum wage levels came into effect on 1 April 2020.

  National Minimum Wage / National Living Wage
  
  Old rate
  
  New rate
  
  25 and over
  
  £8.21
  
  £8.72
  
  21 to 24
  
  £7.70
  
  £8.20
  
  18 to 20
  
  £6.15
  
  £6.45
  
  Under 18
  
  £4.35
  
  £4.55
  
  Apprentice
  
  £3.90
  
  £4.15
  

Injury to Feelings Awards

Unlike in unfair dismissal cases, where only economic loss is recoverable, successful claimants in discrimination and whistleblowing cases can recover compensation in the employment tribunal for non-economic loss, otherwise known as “injury to feelings awards.”

Although there is theoretically no limit on the compensation that may be awarded in discrimination and harassment cases, employment tribunals must follow official guidelines when making awards for injury to feelings. These guidelines set out three bands of compensation, depending on the seriousness of the discrimination and its effect on the victim.

For claims submitted on or after 6 April 2020, the amount that might be awarded for injury to feelings has been increased as follows (the previous maximum amount is shown in square brackets):

  Bands
  
  Old Range
  
  New Range
  
  Lower band (less serious cases)
  
  Between £900 and £8,800
  
  Between £900 and £9,000
  
  Middle band (cases that do not merit an award in the
  upper band)
  
  Between £8,800 and £26,300
  
  Between £9,000 and £27,000
  
  Upper band (the most serious cases)
  
  Between £26,300 and £44,000
  
  Between £27,000 and £45,000