The amount that employers will have to pay out in cases of redundancy and unfair dismissals is set to rise.

Compensation limits and minimum awards payable under employment legislation will increase on 6th April in line with the retail prices index for September 2015 to September 2016.

The new limits are set out in the Employment Rights (Increase of Limits) Order 2017 and are as follows:

Week’s pay

The limit on a week’s pay which is used for calculating certain things, such as statutory redundancy pay and unfair dismissal basic award, will increase from £479 to £489.

Redundancy pay

An employee has the right to statutory redundancy pay if they have worked for you for two years or more. The amount they receive will depend on their age and length of service. At present, the maximum statutory redundancy pay an employee can receive is £14,370. As of April 6th 2017, this will rise to £14,670.

Unfair dismissal

The maximum compensation award for unfair dismissal will rise from £78,962 to £80,541.

Minimum amount of unfair dismissal basic award

In the event that the dismissal is unfair because the reason for the dismissal is due to health and safety issues, being a trade union representative or acting as a trustee to the occupational pension scheme, the minimum basic award will increase from £5,853 to £5,870.

Remember the 6th April…

The new limits will come into effect on 6th April 2017. To put this in context, if the effective date of termination in an unfair dismissal claim falls in May 2017, the new rates will be applicable. However, if the date of termination was in March 2017, the current limits will apply.

To discuss this further, contact your Employment Law Adviser for support. 

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