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New Compensation Limits

4th January, 2012

In December 2011 The Employment Rights (Increase of Limits) Order revealed the revised limits on certain employment tribunal awards and other amounts payable under employment legislation from 1 February 2012.

The Order increases the maximum compensatory award for unfair dismissal to £72,300.  At present the maximum is £68,400.

The limit on the amount of a week’s pay for the purpose of calculating statutory redundancy payments and the basic award for unfair dismissal will increase from £400 to £430.  The maximum amount of statutory redundancy payment and basic award for unfair dismissal for an employee who meets the maximum service test will increase from £12,000 to £12,900.

The minimum basic award in unfair dismissal cases (where the dismissal was unfair by virtue of health and safety, employee representative, trade union, or occupational pension trustee reasons) will increase from £5,000 to £5,300.

There will be an increase in the maximum amount of a guarantee payment payable to an employee from £22.20 per day to £23.50 per day.

The amount of award for unlawful inducement relating to trade union membership or activities, or for unlawful inducement relating to collective bargaining has increased from £3,300 to £3,500.

The new rates will come into force where the event giving rise to compensation or payment occurs on or after 1 February 2012.  Therefore if a dismissal takes place before 1 February 2012, the old limits will still apply; irrespective of the date on which compensation is awarded.

The limits, which are adjusted in line with the Retail Price Index, are reviewed annually and should come as no surprise to employers.  However, they should be borne in mind when considering commercial settlements in employment law claims.

If you are considering redundancies or are facing unfair dismissal claims and need any assistance with queries or issues, please do not hesitate to contact Catherine Kerr in the Employment Law team.

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