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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 £525 to £538.
  • The limit on the daily rate for a guarantee payment is increasing from £29 per day to £30. Guarantee pay is payable, subject to qualifying conditions, for a completely workless day during a period of short time working/lay-off. It’s limited to five days in any three month period.
  • The maximum compensatory award for unfair dismissal is increasing from £86,444 to £88,519. 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 £86,444 (increasing to £88,519) 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 2020.

 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.

  •  National Minimum Wage 

 From 1st April 2020 rates for:

  • Workers aged 25 and over will increase from £8.21 to £8.72 per hour
  • 21 – to 24-year-olds will increase from £7.70 to £8.20 per hour
  • 18 – to 20-year-olds will increase from £6.15 to £6.45 per hour
  • 16 – to 17-year-olds will increase from £4.35 to £4.55 per hour
  • Apprentices aged under 19 or in the first year of an apprenticeship will increase from £3.90 to £4.15 per hour.
  • Family leave pay

The prescribed rate of family leave pay is increasing from £148.68 a week to £151.20. These increases normally occur on the first Sunday in April, which would be 5th April 2020. This would mean that where an employee meets the qualifying conditions for the payment(s):

  • Statutory Maternity Pay (SMP)

First 6 weeks paid at 90% of normal weekly earnings then 33 weeks at £151.20 (or 90% of normal weekly earnings if this is lower)

  • Statutory Adoption Pay (SAP)

First 6 weeks paid at 90% of normal weekly earnings then 33 weeks at £151.20 (or 90% of normal weekly earnings if this is lower)

  • Statutory Paternity Pay (SPP)

£151.20 per week (or 90% of normal weekly earnings if this is lower)

  • Statutory Shared Parental Pay (ShPP)

£151.20 per week (or 90% of normal weekly earnings if this is lower)

  • Statutory Sick Pay (SSP) will increase from £94.25 a week to £95.85 a week on 6th April 2020.

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.