The annual increase in compensation limits have been announced and will apply to all claims where the appropriate date is on or after 1 February 2009.  


This change will only be effective where the employment ends on or after 1 February 2009. Employers should, in particular, note this when calculating statutory redundancy payments.  


The Employment Rights (Increase of Limits) Order 2008 sets out the increase in limits to tribunal awards. The key increases you need to be aware of are:  

  •  a week's pay for the calculation of the basic award in unfair dismissal cases and the statutory redundancy payment increases to £350 (currently £330), giving a maximum award of £10,500;
  • the compensatory award for unfair dismissal increases to £66,200 (currently £63,000);  
  •  guarantee pay increases from the rate of £20.40 a day to £21.50 a day; and  
  •  the minimum basic award for certain dismissals (for trade union, health and safety reasons etc) increases to £4,700 (currently £4,400).  

The new limits will apply where the "appropriate date" falls on or after 1 February 2009. The "appropriate date" will depend upon the type of claim brought, but in most cases, (i.e. unfair dismissal and redundancy pay claims), the appropriate date is an employee's effective date of termination. Where the appropriate date falls before 1 February 2009, the limits currently in force will continue to apply.