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Maximum compensation for unfair dismissal increases from 1 February 2012

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The maximum compensatory award for normal unfair dismissal goes up from £68,400 to £72,300 from 1 February 2012. The new rates apply where the event giving rise to compensation or payment - effective date of termination - falls on or after 1 February 2012.

Where the dismissal or relevant event falls before 1 February, the old limits will still apply, irrespective of the date on which compensation is awarded.

The Employment Rights (Increase of Limits) Order 2011 SI 2011/3006 sets out the new limits and payment made to workers in certain employment tribunal awards and other amounts payable under employment legislation from 1 February 2012. The increases made by this Order reflect the increase in the retail prices index from September 2010 to September 2011

Other changes are:

  • The upper limit for the purposes of calculating, among other things, statutory redundancy payments and the basic awards for unfair dismissal will increase from £400 to £430 week’s pay;
  • The minimum basic award where the dismissal was unfair due to health and safety, employee representative, trade union, or occupational pension trustee reasons will increase from £5,000 to £5,300;
  • Limit on the amount of guarantee payment payable to an employee in respect of any day increases from the rate of £22.20 a day to £23.50 a day.

Contacting us

Given the potential for significantly increased liability, employers should seek advice from Pearson Hinchliffe Commercial Law’s employment law team to ensure that they are complying with legal requirements before dismissing employees. For more information contact employment solicitor, Susan Mayall, using the details provided below.

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.

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