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Increases to Compensation Limits Announced (April 2023)

Is Your Business Ready? Increases to Compensation Limits Announced

It’s that time of the year again, annual increases to limits on certain tribunal awards and employee entitlements have been announced.

The cost of making redundancies will rise for many employers

This is because the limit on a week’s pay which is relevant for calculating statutory redundancy pay is increasing from £571 to £643.

Do you need a hand calculating statutory redundancy pay for any of your employees? Get in touch to request our easy-to-use redundancy pay calculation table.

The statutory guarantee pay limit is going up

Whilst this one is unlikely to break the bank as it’s only increasing from £31 to £35 per day (and is still usually only payable for a maximum of five days in any three month period) it’s one to note as it can be easily overlooked.

As a reminder, statutory guarantee pay is most commonly payable when an employee has a workless day because they are laid-off or are placed on short time working.  If you are considering taking such action, please get in touch for advice before attempting this. It’s important to be aware of what is involved and to check that you have the necessary contractual right in place.

The maximum compensatory award for unfair dismissal is increasing from £93,878 to £105,707

That said, it may be some comfort to bear in mind that many 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 £93,878 (increasing to £105,707) or one year’s salary. There are however some exceptions, for example whistleblowing cases, where there is no limit on the amount of compensatory award that can be ordered.

These new limits will apply where the event that gives rise to the award or payment occurs on or after 6th April 2023.

Unfortunately, these aren’t the only rises that may impact your business.

Don’t forget National Minimum Wage ratesstatutory family leave and statutory sick pay (SSP) rates are changing in April 2023 too.


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