Annual increase to compensation limits announced

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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