Compensation increases from 6 April 2018 confirmed

From 6 April 2018 it will be more expensive for employers to make employees redundant and, if a dismissal is found to be unfair by an employment tribunal, the potential amount of compensation payable will also increase. The legislation implementing these changes was laid before parliament last month.

Each year, employment tribunal awards change in April in line with the Retail Prices Index (RPI) for the previous September. This year sees an unusually high increase of 3.9% as inflation was particularly high at the end of 2017. Not only basic and compensatory awards for successful unfair dismissal claims but also, the amount of statutory redundancy pay is affected by these changes.

The new rates

The new rates which apply from 6 April 2018 are shown in bold. Rates from 6 April 2017 to 5 April 2018 are shown in brackets below.

Maximum amount of a week’s pay (used to calculate various tribunal awards and statutory redundancy pay): £508 (£489).

Maximum amount of statutory redundancy pay (this is calculated using a formula which includes a person’s age, years of service and weekly pay, subject to the cap above): £15,240 (£14,670).

Maximum amount of basic award for unfair dismissal: £15,240 (£14,670).

Maximum amount of compensatory award for unfair dismissal: £83,682 (£80, 541) or one year’s pay, whichever is lower.

Comment

The new rates apply to any dismissals which take place on or after 6 April 2018. Employers need to ensure they factor these changes into any anticipated redundancies and would be well advised to avoid dismissing staff unfairly as this will be more expensive to settle for higher paid employees in the future. With fees to employment tribunals now abolished, there is little reason for employees who believe they have been unfairly dismissed not to bring a claim.

How can we help?

Been dismissed – either for redundancy or some other reason? Speak to one of our employment law experts today – we may be able to assist you in taking your claim to an employment tribunal and securing compensation.


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