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new compensation limits announced

28 February 2014

New limits applying to certain employment tribunal awards and a 'week’s pay' have been announced.

The maximum compensatory award in unfair dismissal claims will increase from £74,200 to £76,574 (although since July last year it is also the case that a claimant can only be awarded up to one year’s salary if that is less than the maximum award).

A week’s pay for calculation of a redundancy payment or basic award in an unfair dismissal case will increase from £450 to £464 from 6 April 2014.

In the case of an unfair dismissal, the new rate will apply where the effective date of termination falls on or after 6 April 2014. If the dismissal was before 6 April the old rates will still be effective, even if the compensation is awarded after that date.

Employers should take the new amounts into account in carrying out any risk analysis for possible employment tribunal awards, as well as for calculation of redundancy pay after 6 April.

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