Increase in statutory rates and compensation limits – April 2018
In line with inflation, new rates and limits will apply to dismissals where the effective date of termination is on or after 6 April 2018.
Statutory Redundancy Payments (“SRP”)
Employees who are made redundant and have at least two years’ continuous service could be entitled to receive statutory redundancy pay.
Such payments are based on an employee’s length of service which is capped at 20 years and their age:
- up to 22 years - half a week’s pay for each year of employment
- from 22 years - 1 week’s pay for each year of employment
- 41 years and over - 1.5 weeks’ pay for each year of employment
Weekly pay is capped at the following rate:
- Current rate: £489
- New rate: £508
Compensation for Unfair Dismissal
If an employment tribunal awards compensation to an employee for unfair dismissal, the award will consist of a basic award and a compensatory award.
Basic Award
This is calculated in the same way as statutory redundancy pay. The maximum cap is therefore:
- Current limit: £14,670
- New limit: £15,240
Employers should note that there is a minimum basic award for dismissals based on Trade Union membership or activities, health and safety activities, being an occupational pension scheme trustee or an employee representative.
- Current limit: £5,970
- New limit: £6,203
Compensatory Award
This is calculated on the employee’s gross annual salary or the statutory cap (whichever is lower):
- Current limit: £80,541
- New limit: £83,682
An important point to note is that there are no limits on the awards for automatically unfair dismissals i.e. discrimination or whistleblowing.
Other Important Changes
Failure to allow right to be accompanied:
- Current cap: £978
- New cap: £1,016
Failure to give a written statement of particulars:
- Current cap: £978 or £1,956
- New cap: £1,016 or £2,032
Flexible working regulations:
- Current cap: £3,912
- New cap: £4,064