UK: Increase in Employment Protection Awards

The compensation limits on tribunal awards will increase from 1 February 2005.

The current maximum amount permitted for calculation of a week's pay will rise from £270 to £280.

The current maximum amount for a week's pay will rise from £270 to £280.

The maximum Compensatory Award a Tribunal can award for unfair dismissal will rise from £55,000 to £56,800.

The minimum Basic Award a Tribunal can award for certain defined dismissals (relating to certain employee representative, health and safety and working time cases) will rise from £3,600 to £3,800.

The changes will take effect on 1 February 2005 and will be applicable to redundancies and dismissals on or after this date.

It is important for employers to note that if an employee:

• is given notice prior to 1 February 2005 but his/her notice period will expire on or after 1 February 2005 then the new limits set out above will apply to that dismissal;

• is paid in lieu of notice, in most cases the effective date of termination will be the actual date of termination plus the amount of statutory notice applicable to the employee (ie 1 week per year of employment up to a maximum of 12 weeks). If the statutory notice would take the effective date of dismissal to or beyond 1 February 2005, then the new limits will apply.

Employers exposure in the event of an unfair dismissal claim will therefore rise and should be factored into decision making about litigation or settlement strategy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.