Employment Tribunal Award Limits
Legislation setting the annual increase in Employment Tribunal Award Limits has been laid before Parliament.
The new rates will apply where the effective date of termination of an employee’s employment (or other calculation date) is on or after 6 April 2023.
A Week’s Pay
The maximum rate of a week’s pay, used for calculating statutory redundancy payments, the basic award for unfair dismissal and certain other tribunal awards, will increase to £643 (up from £571).
The Basic Award
The Basic Award is normally calculated according to the following formula:
- 0.5 week’s pay per complete year of continuous service under the age of 22;
- 1 week’s pay per complete year of continuous service between ages 22 and 40;
- 1.5 weeks’ pay per complete year of continuous service over the age of 41
- A “week’s pay” is calculated gross and is capped at the statutory maximum – currently £643 (from 6 April 2023)
- The maximum period of continuous service taken into account is 20 years
- The minimum period of continuous service required to qualify for a Basic Award is 2 years
- Continuous service is counted backwards from the date on which the employment terminated
The maximum compensatory award for unfair dismissal is set to increase to £105,707 (up from £93,878).
The cap on the compensatory award is the lower of £105,707 or 52 weeks’ pay (based on the claimant’s gross salary prior to the dismissal including employer pension contributions but excluding benefits-in-kind and discretionary bonuses).
Note that there is no statutory cap on compensation if an employee is dismissed for whistleblowing or for carrying out health and safety activities.
Vento Bands for Awards for Injury to Feelings
An award for injury to feelings is made to compensate for injury to feelings caused by discrimination. The award is separate from an award to compensate for financial loss and can be made even where no financial loss has been suffered. Awards for injury to feelings are assessed in bands, known as the Vento bands.
For claims presented on or after 6 April 2023 the bands are as follows:
- Lower band of £1,190 to £11,200 (less serious cases);
- Middle band of £11,200 to £33,700 (cases that do not merit an award in the upper band); and
- Upper band of £33,700 to £56,200 (the most serious cases), with the most exceptional cases capable of exceeding £56,200.
Awards of more than £56,200 will only be made in the most exceptional of cases.
Employee Handbook Compliance Package