Maximum Unfair Dismissal Compensation Rockets to £98k

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23 Feb 2018

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The amount your business will have to pay if an employment tribunal awarded the maximum for unfair dismissal has increased to £98,922.

This is a rise of £3,000 and means tribunal awards will become more costly from April 6 2018. Employers should note that unfair dismissal compensation is capped at an employee’s yearly pay, so if this is £20,000, then the most they will receive is £20,000. But if they earn £100,000 then the new cap will apply. It is also worth noting that compensation for discrimination claims remains unlimited. So even dismissals of employees with under 2 years’ service, who are not eligible to bring an unfair dismissal claim, carry a financial risk if there are discriminatory factors - such as if they are pregnant or disabled. The rise in potential damages follows the rocketing of tribunal claims by 120% since fees were lifted by the Supreme Court in July 2017. This means there are no longer any barriers preventing one of your employees from bringing a claim against your business. Employers should take action now to protect their business from a claim – as any business which has a claim made against them may have to seek legal advice through a solicitor, which costs £5,000 per claim, on average.

Other Compensation Changes

As well as the increase in unfair dismissal compensation, the Government has confirmed statutory redundancy payments are also set to rise. This change will see the maximum amount per weeks’ pay break the £500 barrier for the first time, at £508. This is an increase from £489 and means a 45-year-old with 10 years’ service who earns £600 per week, will get £6,096 redundancy pay after April, compared to £5,868 now. This is a £228 increase. 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 £19 extra per week goes towards the amount of redundancy pay, when someone earns more than the cap. Expert Support Croner’s experts are here to support businesses by ensuring the right employee contracts, documentation and procedures are in place to protect against tribunals. Our experts have on average 15 years’ experience and will offer expert advice if you have an ongoing grievance situation, or a case that is proceeding to tribunal. To enquire about Croner’s HR or employment tribunal support please call 0808 145 3490.

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