Compensation limit in unfair dismissal claims to be increased in 2013

by Redmans Solicitors on December 16, 2012

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The annual increase in the limits on particular Employment Tribunal awards and other amounts payable under employment law legislation have been announced by the Ministry of Justice.

The limit on a week’s “gross pay” (which is used to calculate statutory redundancy payments and the “Basic Award” in unfair dismissal cases) has been increased from £430 to £450. The change in the calculation of statutory redundancy payments will have an effect on a number of a number of issues, such as the calculation of Employment Tribunal awards and the figures allocated to statutory redundancy payments in a compromise agreement.

The maximum compensatory award has been increased from £72,300 to £74,200. However, the Government is currently preparing a report on plans to drastically decrease the maximum award in “normal” unfair dismissal cases in 2013 – the consultation period has finished so watch this space.

The increased amounts will apply to “events” that occur on or after 1 February 2013. For example, if you were dismissed on 31 January 2013 (and subsequently submit an unfair dismissal solicitors to the Employment Tribunal) then you would be entitled to the lower “Basic Award” of £430 and the lower maximum “Compensatory Award” of £72,300. However, if you were dismissed on or after 1 February 2013 then you would be entitled to claim the increased Basic Award and maximum Compensatory Award.

The actual effect of the maximum compensatory award is negligible – only a handful of unfair dismissal cases in the Employment Tribunal received compensation anywhere near £72,300 and the median award for the most recent statistics is approximately £5,000. The vast majority of claims will therefore not be affected by the cap in general or the changes made to the maximum compensatory award.

What the changes do not affect are “automatic” unfair dismissal claims (for example, if you’re dismissed because of a complaint about health and safety in the workplace). There is no “cap” to compensation in these awards. If you think that you may have an automatic unfair dismissal claim then it is normally recommended that you obtain employment law advice.

Redmans Solicitors are London employment lawyers and are specialist unfair dismissal solicitors.

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