Tribunal compensation limits rise in 2023

This article was written by Megan Merrick and Charles Pallot on behalf of Ashfords Solicitors

The Employment Rights (Increase of Limits) Order 2023, which sets out the annual increases to the awards in the Employment Tribunal, has been published. The new increased limits came into force on 6 April 2023.

What were the key increases?

A ‘week’s pay’ (for the purpose of calculating a redundancy payment or basic award for unfair dismissal) - £643 (previously £571)

Maximum compensatory award for unfair dismissal: the lower of a year’s gross pay and £105,707 (previously £93,878)

When do these increased rates apply?

The increased rates apply where the event giving rise to the entitlement to compensation (such as dismissal) began after 6 April 2023.

What does this mean for UK employers?

Employers will need to be aware of these increases for the purposes of calculating various awards.

The limit on a week’s pay is also relevant to employers’ calculations of statutory redundancy payments; therefore, employers may need to budget for higher redundancy packages for any redundancies following the changes.

Disclaimer - all information in this article was correct at time of publishing.