Limits on amounts awarded by Tribunals as compensation will increase from 6 April when the Employment Rights (Increase of Limits) Order 2022 comes into effect. This increases the maximum compensatory limit for unfair dismissals from £89,493 to £93,878.

When calculating a statutory redundancy award or for various other awards, including the basic or additional award for unfair dismissal, the Tribunal puts a limit on the amount of a week’s pay that can be taken into account. This limit has now been raised from £544 to £571, meaning the maximum basic award for unfair dismissal and the maximum amount of statutory redundancy pay (taking into account an employee’s age, years of service and weekly pay) increase from £16,320 to £17,130.

The minimum basic award has also increased from £6,634 to £6,959. This applies where a dismissal has been ruled automatically unfair because of:

• Health and safety;
• Being a trustee of an occupational pension scheme;
• Being an employee representative; and/or
• Because the claimant is a member of a trade union or the reason for their dismissal is involvement in trade union activities.

The amount of an award for unlawful inducement relating to trade union membership or activities or for unlawful inducement relating to collective bargaining will also be increased, from £4,341 to £4,554. This is per employee involved, and could result in employers facing a significant payout if a judgment goes against them.

The increases will come into effect from 6 April 2022 and will not apply to any unfair dismissal that took place before that date. Employers should be aware that for some dismissals that are deemed to be unfair there will be a minimum level of compensation that will be payable. For the purposes of statutory redundancy pay, the maximum weekly pay will be relevant and should be double checked.

Full details can be found here.