The government has now published the annual increases in compensation limits for employment tribunal awards and other statutory payments. These changes are set out in the Employment Rights (Increase of Limits) Order 2024 and will come into force on 6 April 2024, subject to parliamentary approval.
Government Announces Increased Tribunal Compensation Limits
The key increases are:
- the maximum compensatory award for unfair dismissal will increase from £105,707 to £115,115 (the upper limit remains the lower of a year’s salary or the maximum statutory limit)
- the limit on a week’s pay when calculating redundancy pay and various other payments (such as the basic award for unfair dismissal) will be raised from £643 to £700
- the minimum basis award for some forms of unfair dismissal (such as those related to health and safety, employee representative, trade union or occupational pension trustee reasons) will increase from £7,836 to £8,533
- the ‘statutory guarantee pay,’ which applies when an employee is laid or subjected to short-time working, will rise from £35 to £38 per pay.
What Does This Mean for Your Business?
As a result of the current inflationary situation, the increases summarised above are significantly higher than in previous years. This is especially the case with the compensatory award for unfair dismissal, which rocketed by over 12 % in 2023 and will increase by almost 9 % in 2024.
Businesses must be aware of these changes and when they will apply. Subject to parliamentary approval, these changes will apply where the event giving rise to compensation or payment occurs on or after 6 April 2024. Where the dismissal or relevant event took place before 6 April, however, the old limits will still apply, irrespective of the date compensation is awarded. For more information on the increased rates, please contact our expert employment law team via email.
