Annual increases to statutory compensation limits

The The Employment Rights (Increase of Limits) Order 2021 will increase the maximum amount of a “week’s pay” from £538 to £544 from 6 April 2021. A “week’s pay” is used to calculate statutory redundancy payments, payments to employees in the event of insolvency and various awards including the unfair dismissal basic and additional awards. Other key increases are:

• the maximum compensatory award for unfair dismissal will rise from £88,519 to £89,493 (there is an additional cap of one year’s salary on the unfair dismissal compensatory award)
• the minimum basic award for certain unfair dismissals, such as dismissals for reasons of trade union membership or activities, health and safety duties or acting as an employee representative or workforce representative, will go up from £6,562 to £6,634.

However, the limit on the daily amount of statutory guarantee pay will remain at £30.

The increases apply where the event giving rise to the entitlement to compensation or other payment occurs on or after 6 April 2021. In unfair dismissal claims, that date is the effective date of termination of employment. The limits previously in force will still apply where the effective date of termination falls before 6 April 2021.