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Annual Compensation Limit Increase

Annual Compensation Limit Increase

The Government has published details of the annual increases to statutory redundancy pay and the amount of compensation that employment tribunals can award for unfair dismissal, which took effect from 6 April 2015.

The annual increases in compensation limits for statutory employment claims have been passed into law. The new limits apply to certain types of payments that an employment tribunal can award, and the weekly wage caps that apply for certain payments, such as redundancy pay.

The increases reflect Retail Price Increase inflation of 2.3% (as at September 2014). Key changes are:

  • Maximum compensatory award for unfair dismissal increases from £76,574 to £78, 335. Claimants whose annual salary is less than this will still have their maximum compensation capped at a year’s pay.
  • The statutory limit on a week’s pay increases from £464 to £475. As a result the maximum statutory redundancy payment becomes £14,250.
  • The maximum redundancy payment and basic award will rise from £13,920 to £14,250.

The increased compensation limits will apply where the date triggering the employee claim/cause of action falls on or after 6th April 2015. This means that where notice to terminate is served prior to 6th April but the actual date of termination falls on or after that date, the new rates will apply.