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Annual Compensation Limit increases announced

From 6th April, the limits on amounts awarded by tribunals as compensation will increase. rradar employment solicitor Danny Smith takes a look at what you need to know.

Employers should take note that the Employment Rights (Increase of Limits) Order 2022 comes into effect from 6th April. This increases (amongst other things) the maximum compensatory limit for unfair dismissals.

The changes of which employers should be aware are as follows:

The amount of compensation awarded for unfair dismissal was previously limited to £89,493. This has now been raised to £93,878.

When calculating a statutory redundancy award or for various awards including the basic or additional award for unfair dismissal, the tribunal puts a limit on the amount of a week’s pay that can be taken into account. This limit has now been raised from £544 to £571.

Where a dismissal has been ruled automatically unfair because of:

· health and safety,

· being a trustee of an occupational pension scheme,

· being an employee representative,

· because the claimant is a member of a trade union or the reason for their dismissal is involvement in trade union activities,

then there is a minimum basic award. This has now increased from £6,634 to £6,959.

Full details of the increases can be found here:


These increases will come into effect from 6th April 2022. They will not apply to any unfair dismissal that took place before that date. Additionally, the amount of an award for unlawful inducement relating to trade union membership or activities or for unlawful inducement relating to collective bargaining will also be increased, from £4,341 to £4,554. This is per employee involved, and could result in employers facing a significant payout if a judgment goes against them, as was the case in Kostal Ltd v Dunkley, which was concluded in the Supreme Court in 2021.

Employers should familiarise themselves of these limits and be aware that in some dismissals that are deemed to be unfair there will be a minimum level of compensation that will be payable. For the purposes of statutory redundancy pay, the maximum weekly pay will be relevant and should be double checked.