With effect from 6 April 2018, The Employment Rights (Increase of Limits) Order 2018 increased the rates for statutory redundancy pay, the basic award for unfair dismissal and the compensatory award for unfair dismissal as follows:-
Statutory Redundancy Pay
The previous cap of £489.00 on average weekly pay has been increased to £508.00. This will mean an increase to statutory redundancy pay.
Statutory redundancy pay is calculated by multiplying the lower of the employee’s average weekly wage and £508.00 by the number of full years of continuous employment with that employer up to a maximum of 20 years. For each complete year of continuous service between the ages of 18 and 21, an employee is entitled to receive half a week’s pay. The employee is entitled to receive one week’s pay for each complete year of continuous service between the ages of 22 and 40 and for each complete year of continuous service between the ages of 41 and 65, the employee is entitled to receive 1½ weeks’ pay. Given the increase in the average weekly wage to £508.00, the maximum statutory redundancy payment has also increased and is now at £15,240.00, which is calculated by multiplying £508.00 by 20 weeks and then by a factor of 1 ½.
Unfair Dismissal Basic Award
Again, the previous cap on average weekly pay used in calculating the basic award for unfair dismissal has been increased from £489.00 to £508.00. Therefore, given that the basic award for unfair dismissal is calculated in the same manner as a statutory redundancy payment, the maximum basic award that an Employment Tribunal may make for unfair dismissal is now £15,240.00 (i.e. 20 x £508.00 x 1.5).
In addition, the minimum basic award for dismissal on trade union, health & safety, occupational pension scheme trustee, employee representative, and working time grounds: increases from £5,970.00 to £6,203.00.
Unfair Dismissal Compensatory Award
Although the maximum weekly pay figure of £508.00 is not used by the Employment Tribunal to calculate the compensatory element of an award for unfair dismissal, this award is also subject to a maximum, which has been increased from £80,541.00 to £83,682 as of 6 April 2018.
Effect of the Change on Other Awards
As of 6 April 2018, the following awards will also be affected by the increased weekly pay cap; –
- An award for failure to provide written statement of particulars of between 2-4 weeks pay, now capped at £508.00 per week:
- An award for failure to adhere to an employee’s right to be accompanied of up to 2 weeks pay, now capped at £508.00 per week:
- An award for failure to comply with the flexible working regulations of up to 8 weeks pay, now capped at £508.00 per week:
- An award for failure to comply with a tribunal order to reinstate or re-engage the employee of 26-52 weeks pay maximum capped at £508.00 per week.