The maximum compensation that the Employment Tribunal can award for unfair dismissal (save in exceptional cases) and the basis upon which statutory redundancy payments are calculated will increase from 1 February 2012.
The Employment Rights (Increase of Limits) Order 2011 will come into force on 1 February 2012. As a result, for dismissals in respect of which the effective date of termination falls on or after 1 February 2012:
- a week's pay (for the purposes of calculating the basic award in unfair dismissal cases and statutory redundancy payment entitlements) will be capped at £430 (the current limit is £400).
- the maximum compensatory award for unfair dismissal (save in the prescribed exceptional cases) will be capped at £72,300 (the current limit is £68,400).
Compensation awarded for unfair dismissal claims is in the vast majority of cases made up of two strands — the basic award and the compensatory award.
- The basic award is calculated by applying a formula based on age, length of service and a week's pay. As a result of this increase in a week's pay, the maximum total basic award will from February be capped at £12,900.
- The compensatory award is not based on a formula and is designed to compensate the employee for the loss that he/she has suffered. As a result of these increases, the maximum amount which a successful claimant for unfair dismissal can recover (i.e. the basic and compensatory awards) will be capped at £85,200.
Various other statutory compensation limits are also increased from 1 February 2012. Further details can be found at http://www.legislation.gov.uk/uksi/2011/3006/made
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