Significant Increase to Unfair Dismissal Awards and Statutory Redundancy Pay

Lauren Wilson
Lauren Wilson
Associate
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Each April the government increases the financial limits on the compensation which can be awarded by the Employment Tribunal following a successful unfair dismissal claim and the limits which apply to the calculation of statutory redundancy payments. The limits for dismissals taking place on or after 6 April 2023 are set out below.

Where compensation is awarded in connection with a successful unfair dismissal claim, this is usually made of up a basic award, which is calculated in the same way as a statutory redundancy payment, and a compensatory award, which is based on loss of earnings.

The basic award is calculated with reference to the employee’s age, weekly rate of pay and length of service. The employee’s weekly pay for this purpose is subject to a statutory cap. This statutory cap will increase to £643 from 6 April 2023 (up from £571 during the previous year). This is also the cap which will apply to an employee’s weekly pay for the purposes of calculating a statutory redundancy payment.

The compensatory award is capped at 52 weeks’ actual gross pay, subject to an upper statutory limit. This statutory limit will increase to £105,707 from 6 April 2023 (up from £93,878 during the previous year).

These significant increases reflect the high level of inflation which has applied during the last year.

If you would like to discuss the increased rates for calculating unfair dismissal compensation and redundancy pay, or if we can provide any other support or assistance on any employment law matters, please do not hesitate to contact a member of the team on 0141 331 5150.

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