On 1st February 2012, the new limits on a week’s pay for redundancy payment calculations and on the maximum award for unfair dismissal came into effect.
From that date, the limit on a week’s pay to be used when calculating a statutory redundancy payment rose from £400 to £430, meaning that the maximum statutory redundancy payment is now £12,900. The same limit also applies for calculating the basic award,
which is one of the two awards which the Tribunal makes when a claimant succeeds in a claim of unfair dismissal, so that the maximum basic award is now also £12,900.
The other award which the Tribunal makes to a successful unfair dismissal claimant is the compensatory award, which is intended, as its name suggests, to compensate the claimant for the earnings they have lost. The maximum amount which the Tribunal can award
in respect of this also increased with effect from 1st February 2012 and now stands at £72,300.
Another and very significant piece of Tribunal news also emerged recently. With effect from 6th April 2012, the period of continuous employment which an employee needs to have in order to be able to bring a claim of unfair dismissal will go up from 12 months
to two years. However, employers need to be careful that they do not fall into a potential trap with regard to this. For anyone whose employment with their employer began before 6th April 2012, the required period of continuous employment will remain at 12
months and so employers will not suddenly on 6th April 2012 find themselves able to dismiss any of their existing employees who have less than two years’ service. It will only be in respect of those employees whose employment begins on or after 6th April 2012
that the two year requirement will apply.
The Department for Business, Innovation and Skills has explained that the aim of the change to two years is to encourage recruitment and it does not believe that it is "appropriate or necessary to apply it to those already in work".
It’s very important that employers are aware of this and also important that they don’t forget that in respect of certain Tribunal claims, such as discrimination, there is no requirement that employees have any minimum period of service and there is no prospect
of that changing.
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
email@example.com or 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 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.