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Annual Increase in Compensation Limits

As part of the annual process of reviewing the level of compensation and awards that can be claimed by employees, new figures for the coming year have just been released.

In terms of the order made (Employment Rights (Increase of Limits) Order 2022), increases have been made to various maximum and minimum levels which are used when making awards in employment tribunals and other amounts payable under employment legislation. Headline figures see an increase in the level of a “week’s pay” (up from £544 to £571) and the maximum award for unfair dismissal (up from £89,493 to £93,878).

Over recent years, increases have been small but recognising the current economic situation with inflation becoming a live issue, increases this time are larger as they are based on the retail prices index (‘RPI’) increase between September 2020 and September 2021 (+4.9%).

The new figures set out in the Order come into force on 6 April 2022.

While these changes have been happening year on year, from an employment lawyer’s perspective these latest changes based on RPI are a significant jump. What they do is give a timely reminder to all employers of the importance of getting decisions and procedures right in the first place to avoid being in a situation where the increases are real and have to be paid to claimants.

Get in touch with our employment team if you have any questions on these changes.