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September 19, 2014

UK Employment Alert: Increase in Employment Protection Awards

The compensation limits on Tribunal awards will increase as of 1 February 2013.  The key changes are set out below.

Statutory Redundancy Pay

The maximum amount permitted for calculation of a week’s pay will rise from £430 to £450; the maximum entitlement to Statutory Redundancy Pay will therefore rise from £12,900 to £13,500.

Basic Award

The current maximum amount for a week’s pay will rise from £430 to £450; the maximum Basic Award will therefore rise from £12,900 to £13,500 (which would be awarded to an employee aged 61+ with 20+ years service).

Minimum Basic Award for Defined Dismissals

The minimum Basic Award a Tribunal can award for certain dismissals, i.e., those relating to certain employee representative, health and safety and working time cases, will rise from £5,300 to £5,500.

Maximum Compensatory Award

The maximum Compensatory Award a Tribunal can award in most cases of unfair dismissal will rise from £72,300 to £74,200.

The maximum total award for unfair dismissal (i.e. maximum unfair dismissal compensation plus maximum basic award) will therefore rise from £85,200 to £87,700.

What Does This Mean for Employers?

The changes will take effect on 1 February 2013 and will be applicable to dismissals taking effect on or after that date.

It is important for employers to note that:

  • If an employee is given notice prior to 1 February 2013, but the notice period will expire on or after 1 February 2013, the new limits set out above will apply to that dismissal.

  • If an employee is paid in lieu of notice, the effective date of termination (EDT) is the actual date, 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 1 February 2013, the new limits will apply (but see also our most recent employment alert How to Terminate Employment and Exercise a Payment in Lieu of Notice Clause).

Employers’ exposure in the event of an unfair dismissal claim will rise and should be factored into decision making regarding litigation or settlement strategies.

© 2014 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...

+44 20 7577 3492
Associate

Paul McGrath is an associate in the law firm of McDermott Will & Emery UK LLP, based in its London office. His practice covers all areas of contentious and non-contentious employment law in the UK.

44-20-7577-6914