Increase to limits on unfair dismissal awards and redundancy pay

Lauren Wilson
Senior Solicitor
View Profile

The levels of compensation awards which can be ordered by the Employment Tribunal upon successful unfair dismissal claims are set by the government and are typically increased each April in line with inflation. Similarly, the limits applicable to the calculation of statutory redundancy payments are also increased. That being so, the increases in figures from 6 April 2022 are outlined below.

Successful claimants in (most) unfair dismissal cases can be awarded compensation. 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.

The basic award is calculated in 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 £571 from 6 April 2022. This is also the cap which will apply to an employee’s weekly pay for the purposes of calculating a redundancy payment.

The maximum compensatory award is based on loss of earnings and is capped at 52 weeks’ actual gross pay, subject to an upper statutory limit. This statutory limit will increase to £93,878 from 6 April 2022.

We will publish updates on any further changes to compensation rates as they arise. However, if you would like to discuss the increased rates, or if we can provide any other support or assistance on any employment law matters, please do not hesitate to call us on 0141 331 5150.