The compensation limits on UK Employment Tribunal awards and certain other amounts payable under UK employment legislation will increase as of 6 April 2017.

This article sets out the changes in full and highlights important consequences for employers.

In Depth

The compensation limits on Employment Tribunal awards and certain other amounts payable under UK employment legislation will increase as of 6 April 2017.

What Does This Mean for Employers?

The changes relating to redundancy and unfair dismissal payments will take effect on 6 April 2017, and will apply to dismissals that occur on or after that date.

It is important for employers to note that

• If an employee was given notice prior to 6 April 2017, but the notice period expires on or after 6 April, the new limits will apply.

• If an employee’s employment is terminated by means of a payment in lieu of notice, the effective date of termination (EDT) is the actual date the dismissal takes effect, plus the amount of statutory notice applicable to the employee, i.e., one week per year of employment, up to a maximum of 12 weeks. If the statutory notice would take the EDT to or beyond 6 April 2017, the new limits will apply.

An employer’s exposure in the event of an unfair dismissal claim will also rise and should therefore be factored into decisions regarding litigation or settlement strategies.

Note that for other employment claims, such as discrimination and whistleblowing, an employer’s liability is potentially uncapped.