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Employment law for employers

Annual Compensation Limit Increase

The government recently announced two key increases to compensation limits for Employment Tribunal claims.

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Each year the government increases the maximum compensation limits associated with certain employment rights.

The government recently announced two key increases to compensation limits for Employment Tribunal claims:

  • a week’s basic pay will increase from £544 to £571
  • the maximum compensatory award for unfair dismissal will increase from £89,493 to £93,878

The week’s basic pay figure is used to calculate statutory redundancy and unfair dismissal basic awards.

Compensatory awards generally involve the award for the financial losses incurred by a Claimant as a result of their unfair dismissal.

This is a markedly greater increase than in previous years, reflecting the 4.9% increase in the retail prices index from September 2020 to September 2021.

The increases will take effect from 6 April 2022 and so will only apply to any unfair dismissal that occurs on or after that date. Any award for an unfair dismissal that occurred before this date will be by reference to the award maximums applicable at the time of dismissal.

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Zoë Deckker

Trainee Solicitor

zoe.deckker@collyerbristow.com



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