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New limits for unfair dismissal and redundancy payments


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Issued 30 Jan 2009

The limits on payments and awards made to workers by employment tribunals in certain employment rights cases will rise from 1st 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 2009.
(SI 2008 No. 3055)

Column 1               Column 2              Column 3    Column 4
      Relevant statutory     Subject of provision  Old Limits  New
      provision                                                Limits
      Section 145E(3) of the Amount of award for   2,900      3,100
      Trade Union and Labour unlawful inducement
      Relations              relating to trade
      (Consolidation) Act    union membership or
      1992                   activities, or for
                             unlawful inducement
                             relating to
      Section 156(1) of the  Minimum amount of     4,400      4,700
      1992 Act               basic award of
                             compensation where
                             dismissal is unfair
                             by virtue of section
                             152(1) or 153 of the
                             1992 Act.
      Section 176(6A) of the Minimum amount of     6,900      7,300
      1992 Act               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
      Section 31(1) of the   Limit on amount of    20.40      21.50
      Employment Rights Act  guarantee payment
      1996 Act               payable to an
                             employee in respect
                             of any day.
      Section 120(1) of the  Minimum amount of     4,400      4,700
      1996 Act               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.
      Section 124(1) of the  Limit on amount of    63,000     66,200
      1996 Act               compensatory award
                             for unfair dismissal.
      Paragraphs (a) and (b) Limit on amount in    330        350
      of section 186(1) of   respect of any one
      the 1996 Act           week payable to an
                             employee in respect
                             of debt to which Part
                             XII of the 1996 Act
                             applies and which is
                             referable to a period
                             of time.
      Section 227(1) of the  Maximum amount of "a  330        350
      1996 Act               week's pay" for the
                             purpose of
                             calculating basic or
                             additional award of
                             compensation for
                             unfair dismissal or
                             redundancy payment. 


Access this information online at: k/si/si2008/uksi_20083055_en_1
or copies are available from the Parliamentary 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 of the previous September. The variation between September 2007 and September 2008 was +5% (source: ONS, all items RPI).

2. 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. the RPI).

3. The new increases will apply where the event giving rise to the entitlement to compensation occurs on or after 1 February 2009. Limits previously in force (under the Employment Rights (Increase of Limits) Order 2007 (SI 2007/3570) are preserved by article 4 of the Order in relation to cases where the event was before that date.

4. Legally, 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' management systems.

5. Key stakeholders have been informed of the rises.

About the Author

Crown Copyright. Material taken from the BERR- Department for Business, Enterprise and Regulatory Reform replacing DTI - Department for Trade and Industry. Reproduced under the terms and conditions of the Click-Use Licence.

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Article Published/Sorted/Amended on Scopulus 2009-01-30 17:36:00 in Business Articles

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