Increase in compensation limits from April 2021

The limit on a ‘week’s pay’ and the various maximum employment tribunal awards will increase from 6 April 2021.

The Employment Rights (Increase of Limits) Order 2021 effects the following changes:

• The maximum amount of a ‘week’s pay’ – used to calculate statutory redundancy pay and various other payments (e.g., the basic award for unfair dismissal) – increases from £538 to £544
• The maximum compensatory award for unfair dismissal increases from £88,519 to £89,493. The upper limit remains the lower of a year’s salary or the maximum statutory limit
• The minimum amount for unlawful exclusion/expulsion from trade union increases from £10,022 to £10,132
• The limit on the daily amount of guarantee payments remains unchanged at £30 per day
• The minimum basic award in cases where a dismissal is unfair by virtue of health and safety, employee representative, trade union, or occupational pension trustee reasons increases from £6,562 to £6,634

The new rates apply where the event giving rise to compensation or payment occurs on or after 6 April 2021. For example, in the case of unfair dismissal the rates apply to all dismissals where the effective date of termination falls on or after this date. Where the dismissal or relevant event falls before 6 April, the old limits will still apply, irrespective of the date on which compensation is awarded.