Overview
In Depth
The compensation limits on Employment Tribunal awards and certain other amounts payable under UK employment legislation will increase as of 6 April 2014. The key changes are set out below.
|
Award |
Current/Max |
New/Max |
|
Statutory Redundancy Pay – maximum week’s pay. The maximum Statutory Redundancy Pay will rise from £13,500 to £13,920. |
£450 |
£464 |
|
Maximum Compensatory Award – maximum total award for unfair dismissal (i.e., maximum unfair dismissal compensation plus maximum basic award) will rise from £87,700 to £90,494. |
£74,200 |
£76,574 |
|
Basic Award – maximum week’s pay. The maximum Basic Award will rise from £13,500 to £13,920. |
£450 |
£464 |
What Does This Mean for Employers?
The changes will take effect on 6 April 2014 and will be applicable to dismissals taking effect on or after that date.
It is important for employers to note that
- If an employee is given notice prior to 6 April 2014, but the notice period will expire on or after 6 April 2014, the new limits set out above will apply to that dismissal.
- If an employee’s employment is terminated by means of a payment in lieu of notice, the effective date of termination (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 2014, the new limits will apply.
Employers’ exposure in the event of an unfair dismissal claim will rise and should therefore be factored into decision making regarding litigation or settlement strategies.