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Increase in limits on payments under employment rights legislation


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New limits for unfair dismissal and redundancy payments for payments and awards made to workers in certain employment rights cases will rise from the 1 February under the annual index-linked formula.

The increased limits affect:

  • statutory redundancy payments;
  • the basic and compensatory awards for unfair dismissal;
  • the limit on guarantee payment made when employees are not provided with work; and
  • the minimum basic award for unfair dismissal in health and safety and certain other cases.

Table of increases in limits - effective from 1 February 2011.

(SI 2010 No. 2926)

Table of proposed limits

Relevant statutory limits

Subject of provision

Old limits

New limits


Section 145E(3) of the 1992 Act

Amount of award for unlawful inducement relating to trade union membership or activities or for unlawful inducement relating to collective bargaining.



3100 x (4.6%) = 142.6

Round up to the nearest £100

Section 156(1) of the 1992 Act

Minimum amount of basic award of compensation where dismissal is unfair by virtue of section 152(1) or 153 of the 1992 Act



4700 x (4.6%) = 216.2

Round up to nearest £100

Section 176(6A) of the 1992 Act

Minimum amount of compensation where individual excluded or expelled from union in contravention of section 174 of the 1992 Act and not admitted or re-admitted by date of tribunal application



7200 x (4.6%) = 331.2

Round up to nearest £100

Section 31(1) of the 1996 Act

Limit on amount of guarantee payment payable to an employee in respect of any day.



21.20 x (4.6%) = 0.9752

Round up to nearest 10p

Section 120(1) of the 1996 Act

Minimum amount of basic award of compensation where dismissal is unfair by virtue of section 100(1)(a) and (b), 101A(d), 102(1) or 103 of the 1996 Act.



4700 x (4.6%) = 216.2

Round up to nearest £100

Section 124(1) of the 1996 Act.

Limit on amount of compensatory award for unfair dismissal.



65 300 x (4.6%) = 3 003.8

Round up to nearest £100

Paragraphs (a) and (b) of section 186(1) of the 1996 Act

Limit on amount in respect of any one week payable to an employee in respect of a debt to which Part XII of the 1996 Act applies and which is referable to a period of time.



380 x (4.6%) = 17.48 Round up to the nearest £10

Section 227(1) of the 1996 Act

Maximum amount of “a week’s pay” for the purpose of calculating a redundancy payment or for various awards including the basic or additional award of compensation for unfair dismissal.



380 x (4.6%) = 17.48 Round up to the nearest £10

In the above table:

(1) “the 1992 Act” means the Trade Union and Labour Relations (Consolidation) Act 1992; and

(2) “the 1996 Act” means the Employment Rights Act 1996


  1. Access this information online at: or copies are available from the Parliamentary Stationery Office.
  2. 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 of the previous September. The variation between September 2009 and September 2010 was +4.6% (source: ONS, all items RPI).
  3. Section 36(1) and 36(2) of the Act abolished the previous requirement to conduct annual reviews. A Regulatory Impact Assessment is not required in this instance because the Act provides for indexation according to a pre-determined formula (i.e. linked to the RPI).
  4. The new increases will apply where the event giving rise to the entitlement to compensation occurs on or after 1 February 2011. Limits previously in force (under the Employment Rights (Increase of Limits) Order 2008 – S.I. 2008/3055, The Employment Rights (Revision of Limits ) Order 2009 – SI 2009/ No.3274) and The Work and Families (Increase of Maximum Amount) Order 2009 – S.I. 1903) are preserved by article 4 of the Order in relation to cases where the event was before that date.
  5. The Secretary of State is under a duty both to make the uprating Order and to bring the new limits into force as soon as practicable. The changes being made involve no changes to the structure of the awards and other payments, or to employers’

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Article Published/Sorted/Amended on Scopulus 2010-12-30 23:02:51 in Legal Articles

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