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New rules: Unfair dismissal and related awards increase from April 2020

The annual review of the maximum compensation that can be awarded in unfair dismissal and other cases increases the limits from 6 April 2020.

The new maximum for a ‘week’s pay’ (used to calculate the basic award in unfair dismissal cases, statutory redundancy pay and a number of other awards) increases from £525 to £538. This means the maximum basic award for unfair dismissal and the maximum amount of statutory redundancy pay (which is worked out taking into account an employee’s age, years of service and weekly pay) increase from £15,750 to £16,140.

The compensatory award cap also increases, from £86,444 to £88,519 (subject to a limit of one year’s gross pay if that is lower).

The minimum basic award for automatic unfair dismissal, for example on grounds of health and safety or trade union involvement, increases from £6,408 to £6,562.

The new limits apply to dismissals (and other relevant events) occurring on or after 6th April 2020.

Operative date

  • 6 April 2020

Recommendation

  • Employers should budget for the new increases when considering whether to dismiss an employee.

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