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New compensation limits from 1 February 2013

The Employment Rights (Increase of Limits) Order 2012 will come into force on 1 February 2013 increasing the limits on certain employment tribunal awards and other amounts payable under employment legislation from the appropriate dates.

The key changes contained in the 2012 Order are as follows:

•The limit on the amount of a week's pay for the purposes of calculating the basic award for unfair dismissal and statutory redundancy payments (and other awards/payments where the statutory cap applies) will increase from £430 to £450.

•The maximum compensatory award for unfair dismissal goes up from £72,300 to £74,200.

•Guaranteed pay (under S.31 of the Employment Rights Act 1996, where an employee is not provided with work throughout a day during which he would normally be required to work under his contract of employment) increases from £ 23.50 per day to £24.20.

•The minimum basic award in cases where the dismissal was unfair by virtue of carrying out activities as a health and safety representative, acting as an employee or workforce representative in specified matters, trade union membership or activities, or occupational pension trustee reasons, will increase from £5,300 £ 5,500.

The new rates apply where the appropriate date giving rise to a compensation award or payment, as set out in Article 4 of the Order, occurs on or after 1 February 2013. As an example, in the case of unfair dismissal the rates apply to all dismissals where the effective date of termination falls on or after this date. Where the appropriate date falls before 1 February, the old limits will still apply, irrespective of the date on which compensation is awarded.

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