Increase in UK Employment Protection Awards

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Overview


In Depth


The compensation limits on Employment Tribunal awards and certain other amounts payable under UK employment legislation increased as of 6 April 2015. The key changes are set out below.

Award

Old Maximum

New Maximum

Statutory Redundancy Pay – cap on a week’s pay.

The maximum Statutory Redundancy Pay will rise from £13,920 to £14,250.

£464

£475

Basic Award – cap on a week’s pay.

The maximum Basic Award will rise from £13,920 to £14,250

£464

£475

Maximum Compensatory Award

The maximum total award for unfair dismissal, i.e., maximum unfair dismissal compensation plus maximum basic award, has risen from £90,494 to £92,585.

£76,574

£78,335

 

What Does This Mean for Employers?

The changes took effect on 6 April 2015 and apply to dismissals that occurred on, or will occur after, that date.

It is important for employers to note that

  • If an employee was given notice prior to 6 April 2015, but the notice period expired on 6 April or will expire on a future date, the new limits 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 2015, the new limits will apply.

An employer’s exposure in the event of an unfair dismissal claim will also rise and should therefore be factored into decision-making regarding litigation or settlement strategies.