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Maximum Tribunal Awards to Increase

18th January, 2011

Maximum Tribunal Awards to Increase The Employment Rights (Increase of Limits) Order 2010, which sets out the new tribunal compensation limits, has come before Parliament.

The Order increases the maximum compensatory award for unfair dismissal cases to £68,400. At present, this figure is £65,300. The minimum basic award for unfair dismissals (in certain circumstances, for example where an employee is dismissed due to trade union activities or membership) has also increased, from £4,700 to £5,000. These figures will apply where the employee’s effective date of termination is on or after 1 February 2011.

The maximum limit on a week’s pay has also increased from £380 to £400. This is used, for example, as a maximum for an employee’s weekly wage when calculating redundancy payments. This change will also take effect from 1 February 2011.

This is the first time the maximum compensatory award will be increased since 1 February 2009, when the limit was increased from £63,000 to £66,200. The limit then remained the same in October 2009, and was actually decreased in February 2010, to reflect a drop in the Retail Price Index (RPI), which is used to help calculate the limits.

The last time the upper limit on a week’s pay was changed was October 2009, where it was increased by the Government to £380, in an attempt to assist those who were being made redundant at the height of the economic crisis.

Although these limits are considered annually, and the increases should come as no surprise to employers, it is something which should be borne in mind when considering commercial settlements in employment law claims.

If you have any employment law queries or issues, please do not hesitate to contact a member of the team who will gladly assist you.

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