New legislation

The Employment Rights (Increase of Limits) Order 2008 will increase compensation limits for individuals bringing a claim in the Employment Tribunal from February 2009.

The maximum unfair dismissal compensation sum will increase from £63,000 to £66,200, and the weekly rate for the purpose of statutory redundancy payments and the basic award given in unfair dismissal cases will rise from £330 to £350.

The maximum amount that can be awarded for statutory redundancy payments will increase from £9,900 to £10,500.

In October 2008, the National Minimum Wage rates increased from £5.52 to £5.73 for workers aged 22 and over, from £4.60 to £4.77 for workers aged 18 – 21 (and those aged 22 and over doing accredited training in the first six months of employment), and from £3.40 to £3.53 for workers aged 16 and 17.

Effect on employers

This will mean that if cases for unfair dismissal and redundancy payments go all the way to a trial in the Employment Tribunal and are successful, employers will be required to pay a higher level of compensation to the employee, which will have a negative impact on the employer commercially. It may also act as a deterrent for some employers who may be considering dismissing someone unfairly.