The compensation limits on Employment Tribunal awards and certain other amounts payable under UK employment legislation will increase as of 6 April 2018.
This alert sets out the changes in full and highlights important consequences for employers.
Key Changes Coming into Effect on 6 April 2018
One week’s pay for calculating redundancy and the unfair dismissal basic award
Maximum basic award for unfair dismissal andmaximum statutory redundancy pay
Unfair dismissal compensatory award
This change means that the maximum total award for unfair dismissal, i.e., maximum unfair dismissal compensation plus maximum basic award, has risen from £95,211 to £98,922.
National living wage for all workers aged 25 and over, per hour
£7.83 (from 1 April 2018)
National minimum wagefor workers aged 21 to 24, per hour
£7.38 (from 1 April 2018)
Statutory sick pay, per week
Family-friendly statutory pay (adoption, maternity, paternity and shared parental pay) per week
£145.18 (from 1 April 2018)
What Does This Mean for Employers?
The changes relating to redundancy and unfair dismissal payments will take effect on 6 April 2018 and will apply to dismissals that occur on or after that date.
It is important for employers to note:
If an employee was given notice prior to 6 April 2018, but the notice period expires on or after 6 April, the new limits will apply.
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 2018, 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 decisions regarding litigation or settlement strategies.
Note that for other employment claims, such as discrimination and whistleblowing, an employer’s liability is potentially uncapped.