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Compensation Limits on UK Employment Tribunal Awards

The compensation limits on UK Employment Tribunal awards and certain other amounts payable under UK employment legislation will increase as of 6 April 2017.

This article sets out the changes in full and highlights important consequences for employers.

In Depth

The compensation limits on Employment Tribunal awards and certain other amounts payable under UK employment legislation will increase as of 6 April 2017.

Key Changes Coming Into Effect on 6 April 2017 (except as noted)

Award

Old Maximum

New Maximum

One week’s pay for calculating redundancy and the unfair dismissal basic award

£479

£489

Maximum basic award for unfair dismissal and maximum statutory redundancy pay 

£14,370

£14,670

Unfair dismissal compensatory award

This means that the maximum total award for unfair dismissal, i.e., maximum unfair dismissal compensation plus maximum basic award, has risen from £93,332 to £95,211.

£78,962

£80,541

National Living Wage for all workers aged 25 and over, per hour

£7.20

£7.50

National Minimum Wage for workers aged 21 to 24, per hour

£6.95

£7.05

Statutory Sick Pay, per week

£88.45

£89.35

Family friendly statutory pay – adoption, maternity, paternity and shared parental pay, per week (on 2 April 2017)

£139.58

£140.98 (from 2 April 2017)

What Does This Mean for Employers?

The changes relating to redundancy and unfair dismissal payments will take effect on 6 April 2017, and will apply to dismissals that occur on or after that date.

It is important for employers to note that

  • If an employee was given notice prior to 6 April 2017, 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 2017, 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. 

© 2017 McDermott Will & Emery

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About this Author

Katie Clark, McDermott WIll Emery Law Firm, Labor employment attorney
Partner

Katie Clark is a partner in the law firm of McDermott Will & Emery UK LLP, based in its London office.  Her practice focuses on contentious and non-contentious employment matters. 

Katie is recognised as a leader in her field in Chambers UK 2011.  She is described as a “recognised force for her advocacy and commercial employment advice”, Chambers UK 2010 and as “very knowledgeable, superbly responsive, and no-nonsense…” Legal 500 UK 2011.

Her clients include global corporations, financial institutions, FTSE 100 companies, manufacturing companies...

+44 20 7577 3492