The Government has just announced the new maximum for the compensatory award in unfair dismissal claims and the new cap for a weeks’ pay to be used for calculating statutory redundancy pay and certain tribunal awards.
From 6 April 2015, the cap on a weeks’ pay will rise to £475 (currently £464) and the maximum compensatory award for an unfair dismissal claim will rise to the lower of either a years’ gross pay or £78,335 (currently £76,574). It is however possible for Tribunals to award a total of £92,585 in unfair dismissal compensation when the maximum basic award is also taken into account.
The increases which are in line with current inflation rates are not unexpected but they will no doubt be unwelcome for employers as it will mean an increase in the cost of making redundancies (the maximum statutory redundancy payment will increase to £14,250).
The new rates will apply to events which give rise to compensation that occur on, or after, 6 April 2015. The old limits will apply to cases where the event occurred before 6 April 2015. This is worth bearing in mind if you are planning on making redundancies in the next few months, as the cost of redundancy pay is soon set to rise.
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