New Employment Rights Limits announced from 6 April 2018

The new employment rights limits have been announced, including increases to unfair dismissal compensation awards. The new amounts will take effect from 6 April 2018:

• The limit on the compensatory award for unfair dismissal will be £83,682 (approx. £3000 more than it is now)
• The limit of the basic award will be £15,240 (up from £14,670)
• The limit for an additional award for failure to comply with a reinstatement or re-engagement order rises to £13,208 (up from 12,714)
• Statutory redundancy payments will also increase because the maximum weeks’ pay to be used will increase from £489 to £508 (breaking the £500 barrier for the first time)

This will mean that:

• Tribunal awards will become more costly from April 2018
• Since fees have been reduced, there is nothing preventing employees from bringing claims and, if they’re successful from 6 April, businesses and organisations will receive a greater financial hit than ever before
• Employers should take steps to reduce or remove the risk from being taken to tribunal

Unfair dismissal compensation is capped at an employee’s yearly pay. If this is £20,000, then the most they can get is £20,000. But if they earn £100,000 the new cap will limit this to £83,682.

Statutory redundancy pay is calculated using an employee’s age, length of service and weekly pay. Weekly pay is capped but this increase means that from 6 April 2018 £19 extra per week goes towards the amount of redundancy pay when someone earns more than the cap. The increase means that a 45 year old with 10 years’ service who earns £600 per week will get £6096 redundancy pay if the date of their redundancy is on or after 6 April 2018 compared to £5868 now (a £228 increase).

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