Changes to redundancy and dismissal limits in February 2012
7 February 2012
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From 1 February, the amount that employees can be awarded under certain circumstances has increased. Find out which payments they are and how they apply to your business.
Please note: For the new limits to be applicable, the event giving rise to the payment must occur on or after 1 February 2012.
 

Redundancy

If you are calculating redundancy pay out, the cap on a week's pay has increased from £400 to £430 and the maximum statutory redundancy payment is now £12,900 (formerly £12,000).
 

Unfair dismissal – basic award

The limit on a week's pay for calculating the basic award for unfair dismissal has increased s from £400 to £430. The basic award is calculated in the same way as statutory redundancy pay, so it is based on the employee's age, length of service and earnings.
 
To calculate the basic award for an unfair dismissal or statutory redundancy payment, an employee is entitled to:
  • 0.5 week's pay for each full year of service where the employee was aged under 22 during the year
  • 1 week's pay for each full year of service where the employee was aged above 22 but under 41 during the year
  • 1.5 weeks' pay for each full year of service where the employee was aged over 41 during the year.

Unfair dismissal - compensatory award

The maximum compensatory award for unfair dismissal has increased from £68,400 to £72,300 on 1 February. Note, however, that there is no limit on the amount of compensation tribunals can award in cases of unlawful discrimination.
 

A ‘week's pay' for other compensatory awards

The increase to the statutory cap on a week's pay from £400 to £430 has also raised the limit on certain other awards a tribunal can make. This award is used when employers are found to have refused to allow an employee to be accompanied at a disciplinary or grievance hearing or failed to follow the statutory procedure in relation to a request for flexible working.
 

Guarantee payment increases

The limit on the guarantee payment for a "workless day" – one where an employee would normally be required to work but the employer cannot provide work – has also risen, from £22.20 to £23.50.
 

If you require help with calculating statutory payments, or would like to discuss any employment or HR issue, members can call our helpline on 0845 130 1722 to speak to an adviser.


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