Revised Limits on Payments Under Employment Rights Legislation
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Issued 01 February 2010
Limits on awards and payment made to workers in certain employment rights
cases will be revised from 1st February under the annual index-linked formula.
The revised limits affect:
- The maximum amount of compensatory awards for unfair dismissal;
- the limit on guarantee payments made when employees are not provided with
- the minimum amount of compensation for exclusion or expulsion from a trade
Table of revised limits, effective from 1 February 2010: http:/ /nds.coi.gov.uk/ImageLibrary/detail.aspx?MediaDetailsID=1323
Access this information online at:
or copies are available from the Stationery Office.
1. Section 34 of the Employment Relations Act 1999 provides that the limits
on various awards and payments under employment legislation will be
index-linked, i.e. will be varied by Order if the Retail Prices Index (RPI) for
September of a year is higher or lower than the index for the previous
September. The variation between September 2008 and September 2009 was minus
1.4% (source: ONS, all items RPI).
2. In applying the relevant percentage increase or, as in this case,
decrease, the Secretary of State is required to round up the new sums, variously
to the nearest 10 pence, £10 or £100 with the result that variations in the
percentage revisions occur. This year the retail prices figure used in the
calculation is minus 1.4%. The requirement to round up has meant that three of
the sums are reduced. It has also meant that others remain the same and are
therefore not revised by the Order, although they are noted in the Explanatory
Note for information.
3. The Work and Families (Increase of Maximum Amount) Order 2009 (S.I.
2009/1903) excluded certain limits from the 2010 annual uprating formula. These
are the limit on a week's pay for calculating statutory redundancy payments, and
tribunal awards that use a week's pay as the basis for calculation. These limits
were previously increased - from £350 to £380 - on 1 October 2009.
4. The amounts revised by the present Order will apply where the event giving
rise to the entitlement to compensation occurs on or after 1 February 2010. The
previous Order (the Employment Rights (Increase of Limits) Order 2008 (SI
2008/3055)) continues to apply to the limits which are revised by the present
Order in relation to cases where the relevant event was before 1 February 2010.
The 2008 Order also continues to apply to the limits that were not included in
this Order because they remained the same after rounding.
5. Legally, the Secretary of State is under a duty both to make the Order and
to bring the revised limits into force as soon as practicable. An Impact
Assessment is not required in this instance because the Act provides for
indexation according to a pre-determined formula (i.e. the RPI) and the changes
being made do not impact on business. They involve no changes to the structure
of the awards and other payments, or to employers’ management systems.
6. Key stakeholders have been informed of the revised amounts.
Department for Business, Innovation & Skills
The Department for Business, Innovation and Skills (BIS) is building a
dynamic and competitive UK economy by: creating the conditions for business
success; promoting innovation, enterprise and science; and giving everyone the
skills and opportunities to succeed. To achieve this it will foster world-class
universities and promote an open global economy. BIS - Investing in our future.
About the Author
© Crown Copyright. Material taken from the Department
for Business, Innovation & Skills. Reproduced under the terms and conditions of
the Click-Use Licence.
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Article Published/Sorted/Amended on Scopulus 2010-02-03 11:52:11 in Employee Articles