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July 28, 2014

United Kingdom Employment Compensation Payments Increase

Annual increase on certain statutory payments takes effect from 1 February.

On 1 February, the annual increase on certain statutory payments comes into effect. The key changes are the following:

  • Maximum unfair dismissal compensatory award: £74,200 (increase from £72,300)
  • Maximum unfair dismissal basic award: £13,500 (increase from £12,900)
  • Cap on a week's pay for certain statutory calculations: £450 (increase from £430)
  • Maximum statutory redundancy pay: £13,500 (increase from £12,900)

Other increases will take effect in April 2013, including increases in statutory maternity pay and statutory sick pay, and the level of national minimum wage will increase in October 2013.

Additionally, on 17 January, the government announced that the cap on the unfair dismissal compensatory award will change. Beginning around summer 2013, unfair dismissal compensation will be capped at the lower of the statutory cap (currently £74,200) and 12 months' pay. This is a major change in UK employment law and one that employers will welcome because the financial risk of dismissing an employee who earns less than the statutory cap will be reduced. However, it is likely to mean that more employees will make discrimination or whistleblowing claims, for which no statutory cap applies.

Copyright © 2014 by Morgan, Lewis & Bockius LLP. All Rights Reserved.

About the Author

Associate

Celia Kendrick is an associate in Morgan Lewis's Labour and Employment Practice.  Celia advises on all aspects of contentious and non-contentious employment law, including employment contracts and compromise agreements, TUPE, redundancy programmes, trade union issues, the enforceability of restrictive covenants and the employment law aspects of mergers and acquisitions and insolvencies, as well as day-to-day employment matters, including disciplinary and grievance issues, maternity leave and sickness absence, and dismissals. 

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About the Author

Partner

Matthew Howse is a partner in Morgan Lewis's Labour and Employment Practice and has 17 years of experience in the employment field. His practice includes both contentious and noncontentious matters and is focused on companies in the financial services, media, legal, and insurance industries. Matthew provides strategic advice on employment law issues, advises on the employment law aspects of transactions, and has successfully represented clients in high court and employment tribunal litigation.

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The Morgan Lewis Labor and Employment Practice strives for excellence in client service. For more than half a century, our lawyers have helped clients negotiate the ever-changing landscape of federal, state, and local laws that govern the workplace. We get to know you, your business, and your industry, and assist you in devising solutions to employment problems that affect the efficiency and productivity of your workforce.

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