Increase in compensation limits from April 2023

The limit on a ‘week’s pay’ and the various maximum employment tribunal awards will increase from 6 April 2023.

The Employment Rights (Increase of Limits) Order 2023 makes 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 £571 to £643
  • The maximum compensatory award for unfair dismissal increases from £93,878 to £105,707 (the upper limit remains the lower of a year’s salary or the maximum statutory limit).
  • 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 £6,959 to £7,836

The new rates apply where the event giving rise to compensation or payment occurs on or after 6 April 2023. 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.