Increase in Tribunal Compensation Limits

The Government has announced the changes to compensation limits in the Employment Tribunal. These new rates will apply to all claims which are presented in the Employment Tribunal on or after 6 April 2024.

The government has announced the annual increase in compensation limits for Employment Tribunal awards and other statutory payments. The government has decided to increase the awards to reflect the increase in the retail prices index (RPI) of 8.9% from September 2022 to September 2023.
The changes are detailed within The Employment Rights (Increase of Limits) Order 2024 and employers should be aware of the following, particularly where the company is about to undergo a redundancy process or other form of dismissal:

1. The maximum compensatory award for unfair dismissal is increasing from £105,707 to £115,115 (although the cap remains at 52 weeks’ pay if this is lower).

2. The limit on a statutory week’s pay is also increasing from £643 to £700. This therefore increases the overall cap on statutory redundancy pay to £21,000.

3. The minimum basic award for some forms of unfair dismissal rises from £7,836 to £8,533.

4. Statutory guaranteed pay increases from £35 to £38 per day.

The weekly pay is applied in a number of contexts, including basic awards for unfair dismissal, statutory redundancy pay and awards of compensation that are made due to an employee not having been issued with the correct contract of employment (or written particulars).

As a result of these changes Employers will need to cover the increases in costs when facing employment claims for redundancies and dismissals.

These changes will only apply to claims which are presented to the Tribunal on or after 6th April 2024. For claims or events which take place before this date, the old rates will continue to apply.

If you have any questions about the new changes being introduced or if you would like further guidance in relation to these areas, please get in contact with our specialist employment team.

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