Changes to Compensation Limits on the Way

It has been announced that the limits on certain tribunal awards and other sums payable under employment legislation will be increasing.

The changes that will be of most interest to employers are:

  • The limit on a week’s pay which is relevant for such things as statutory redundancy pay calculations, is increasing from £538 to £544.
  • The maximum compensatory award for unfair dismissal is increasing from £88,519 to £89,493. However, the majority of employees will not be able to receive sums in the region of that amount. This is because the rules regarding the compensatory award mean that the employee is limited to receiving whichever is the lower of £88,519 (increasing to £89,493 ) or one year’s salary. However, there are some exceptions, for example whistleblowing cases, where there is no limit on the amount of compensatory award that can be ordered.

The new limits will be applicable where the event that gives rise to the award or payment occurs on or after 6th April 2021.

Reminder

You may remember from our earlier Legal Updates that there will also be increases to the national minimum wage rates and statutory family leave and sickness payments in April.

From 1st April 2021 the National Minimum Wage rates per hour will be:

  • National Living Wage (workers aged 23 and above): £8.91
  • 21-22 year olds: £8.36
  • 18 – 20 year olds: £6.56
  • 16 – 17 year olds: £4.62
  • Apprentice rate: £4.30

Information regarding statutory family leave and sickness payment increases can be found here.

If you have any employment law matters you would like assistance with, please do not hesitate to contact us as we are happy to help.