Annual increase to compensation limits announced

The annual compensation limit increase, contained in the Employment Rights (Increase of Limits) Order 2016, has been released.  The inflation-linked changes will apply from 6 April 2016.

The main changes are the increase in the maximum compensatory award for unfair dismissal from £78,335 to £78,962 and the maximum amount for a week’s pay (used to calculate statutory redundancy payments or basic awards for unfair dismissal) will also increase from £475 to £479.  Note that if the employee’s gross annual pay amounts to less than £78,962 then unfair dismissal compensation remains capped at one year’s gross pay.

These changes will apply if an employee’s date of termination of employment falls on or after 6 April 2016.

The weekly rate of statutory sick pay and the weekly flat rate of statutory maternity, paternity, adoption and shared parental pay will not increase this year. 

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