Employment tribunal awards

New Limits on Awards for Unfair Dismissal and Redundancy Payments

Payments and awards made to workers in employment rights cases will rise from today in line with inflation.

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; the minimum basic award for unfair dismissal in health and safety and certain other cases.

Notes:

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.

2. Section 36(1) and 36(2) of the Act abolished the previous requirement to conduct annual reviews. The new limits reflect changes in the RPI between September 2003 and September 2004 (an annual increase of 3.1% over September 2003 - source: ONS, all items RPI). 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 increases will apply where the event giving rise to the entitlement to compensation occurs on or after 1 February 2005. Limits previously in force (under the Employment Rights (Increase of Limits) Order 2003 (SI 2003/3038)) 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.

6. Copies of the new Order are now available from the Stationery Office. It is also accessible on the internet at http://www.legislation.hmso.gov.uk.

7. Table of increases in limits from 1 February 2005.

The Employment Rights (Increase of Limits) Order 2004
(SI 2004 No. 2989)

     Column 1   Column 2                     Column 3   Column 4
     Relevant   Subject of provision         Old Limits New Limits
     statutory
     provision
1    Section    Minimum amount of basic      £3,600     £ 3,800
     156(1) of  award of compensation where
     the 1992   dismissal is unfair by
     Act        virtue of section 152(1) or
                153 of the 1992 Act.
2    Section    Minimum amount of            £5,900     £6,100
     176(6) of  compensation awarded by the
     the 1992   Employment Appeal Tribunal
     Act        where individual excluded or
                expelled from union in
                contravention of section 174
                of the 1992 Act.
3    Section    Limit on amount of guarantee £17.80     £18.40
     31(1) of   payment payable to an
     the 1996   employee in respect of any
     Act        day.
4    Section    Minimum amount of basic      £3,600     £3,800
     120(1) of  award of compensation where
     the 1996   dismissal is unfair by
     Act        virtue of section 100(1)(a)
                or (b), 101A(d), 102(1) or
                103 of the 1996 Act.
5    Section    Limit on amount of           £55,000    £56,800
     124(1) of  compensatory award for
     the 1996   unfair dismissal.
     Act
6    Paragraphs Limits on amount in respect  £270       £280
     (a) and    of any one week payable to
     (b) of     an employee in respect of
     section    debt to which Part XII of
     186(1) of  the 1996 Act applies and
     the 1996   which is referable to a
     Act        period of time.
7    Section    Maximum amount of "a week's  £270       £280
     227(1) of  pay" for the purpose of
     the 1996   calculating basic or
     Act        additional award of
                compensation for unfair
                dismissal or redundancy
                payment.

More information is available via www.dti.gov.uk/er/