Increase in compensation limits for Employment Tribunal awards from 1 February 2013

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Posted in:HR and Employment|January 23, 2013 | Join the mailing list

The compensation limits on Employment Tribunal awards are going up and as of 1 February 2013 are as follows:

1. The maximum amount permitted for calculation of a week’s pay will rise from £430 to £450 and consequently the maximum statutory redundancy payment will rise from £12,900 to £13,500.

2. The maximum unfair dismissal basic award will also therefore rise from £12,900 to £13,500 (which would be awarded to an employee aged 61 and above with 20 or more years’ service).

3. The minimum basic award for unfair dismissals relating to employee representative, trade union or occupational pension trustee reasons or in health and safety cases will rise from £5,300 to £5,500.

4. The maximum compensatory award in most cases of unfair dismissal will rise from £72,300 to £74,200. (The Government has also recently announced proposals to introduce new legislation making the maximum compensatory award whichever is the
lower of 12 months’ salary or the maximum statutory cap (as stated above). See our article: New Year New Law – Government announces important changes to employment law.)

5. The maximum total award for unfair dismissal (i.e. maximum unfair dismissal compensatory award plus maximum basic award) will therefore rise from £85,200 to £87,700.

The changes will take effect on 1 February 2013 and will be applicable to dismissals taking effect on or after that date. Employers should note that if an employee is given notice prior to 1 February 2013, but the notice period expires on
or after 1 February 2013, then the new limits will apply to that dismissal.

Nigel Crebbin of Berg commented that: "Employers’ exposure in the event of an unfair dismissal claim will rise and this should be factored into decision-making in terms of settlement strategies and risk analysis.

If you are considering making redundancies and/or dismissing an employee, it’s important that you are fully informed of the risks involved in taking such action and also that you follow the correct procedures. This will ensure that your position
as an employer is protected, so far as possible. Dismissing an employee for a reason other than one allowed by law or dismissing without following the correct procedure or giving adequate notice, may lead to a claim for unfair or wrongful dismissal against
your business. Furthermore, regardless of whether or not the claim succeeds, the costs of defending it, in terms of management time and legal costs, may be significant and are not usually recoverable even if you win the case."

To discuss how we can provide further advice in connection with these issues, please contact Nigel Crebbin, Partner in our Employment Team, by email to Alternatively, you can call Nigel on 0161 833 9211.

The information and opinions contained in this article are not intended to be comprehensive or to provide legal advice. No responsibility for this article’s accuracy or correctness is assumed by Berg or any of its partners or employees. Professional
legal advice should be obtained before taking, or refraining from taking, any action as a result of the contents of this article.

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